Bernanke gets top grade in investor poll
Federal Reserve Chairman Ben Bernanke received the highest rating for handling the worst financial crisis since the Great Depression, according to the first Quarterly Bloomberg Global Poll.
In the survey, 75 percent of respondents had a favorable view of Bernanke, and believed that the 55-year-old chairman should be re-appointed to another four-year term as head of the world's most powerful central bank when his current one expires in January.
What's more, 61 percent of those surveyed say the global economy is stable or improving.
In the poll, ECB President Jean-Claude Trichet received a favorable rating of 54 percent, Bank of England Governor Mervyn King received 50 percent, China's Central Bank Governor Zhou Xiaochuan totaled 42 percent.
"He's the best, maybe around the world," Wallace Lin, an investment manager with Euro Asset Management in Hong Kong, who participated in the poll, Bloomberg News reported.
Bernanke also outpolled U.S. Treasury Secretary Timothy Geithner, former head of the Federal Reserve Bank of New York, who received a 57 percent favorable rating.
The first Quarterly Bloomberg Global Poll surveyed investors and analysts on six continents. The current poll contained 1,076 respondents, who were interviewed July 14-17.
The poll's release occurs amid Bernanke's semi-annual testimony before Congress on the state of the economy. On Tuesday, the Fed chairman told House Financial Service Committee members that the economy is finally improving, but because several hurdles and hazards remain, the Fed must keep interest rates close to zero, at least until unemployment shows signs of falling, The New York Timesreported Tuesday. Further, given economic slack, Bernanke added that the U.S. economy contained the risk of "only limited" inflation pressure, at this juncture.
As a part of a government plan to stabilize the financial system, the Fed has provided record amounts of funds to credit markets, increasing its balance sheet to $2 trillion from about $800 billion before the financial crisis. Up until Tuesday's testimony, Bernanke and other Fed officials had said almost nothing about when they expect to unwind its balance sheet and withdraw liquidity, on concerns that investors would interpret those comments as a sign the central bank plans to wind down its intervention soon.
Economic Analysis: So far, Bernanke deserves a high grade concerning the Fed's response to the financial crisis. I'd say he's earned a B+. The Fed, in conjunction with the actions by other, major central banks (European Central Bank, Bank of England, Bank of Japan, Swiss National Bank), has effectively maintained the U.S. and global financial systems, and has re-liquefied key financial markets. Still, keep in mind this is only a 'mid-term' grade: much monetary work remains. The liquidity crisis is over, but the lending crisis is not: banks are still not lending enough, and companies, particularly small businesses, are having trouble accessing sufficient lines of credit. The Fed must find ways to encourage banks to increase credit lines to facilitate commerce -- essential for a return to adequate U.S. GDP growth.