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Forget Aloof, Bernanke Goes Barnstorming

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KANSAS CITY, Mo. — Ben S. Bernanke, the chairman of the Federal Reserve, is on a publicity campaign with a message: the central bank is here to help, and it is not as mysterious or menacing as people might think.

In a profound departure from the central bank’s tradition as an aloof and secretive temple of economic policy, Mr. Bernanke has plunged into the public spotlight to an extent that none of his predecessors would have contemplated.

He has given a television interview to “60 Minutes†on CBS, including a tour of his hometown, Dillon, S.C.; held what amounted to a televised news conference; and written newspaper commentaries to explain the Fed’s efforts to fight the financial crisis.

On Sunday, Mr. Bernanke reached another milestone in his evolution from Fed chairman to Fed showman, participating in a one-hour town hall-style forum here organized and moderated by Jim Lehrer of “The NewsHour†on PBS.

Like a political candidate on the campaign trail — indeed, his four-year term expires in January — Mr. Bernanke fielded questions from local residents and tried to rebuff charges that the Fed was either conspiring with big banks, stifling free-market capitalism or possibly doing both at the same time.

When a small-business owner asked Mr. Bernanke why the Fed helped rescue big banks while “short-changing†small companies, Mr. Bernanke answered that he had decided to “hold my nose†because he was afraid the entire financial system would collapse.

“I’m as disgusted by it as you are,†he told the audience of 190 people. “Nothing made me more angry than having to intervene, particularly in a few cases where companies took wild bets.â€

It was a far cry from what any other Fed chairman has been willing to do, but it was just the latest example of Mr. Bernanke’s attempt to communicate directly with the public. Last week alone, Mr. Bernanke published a lengthy commentary in The Wall Street Journal, then testified before three separate Congressional committees and presided over a public Fed meeting to announce new regulations of credit card practices.

Of course, the Fed had already become more open in the decade before Mr. Bernanke took the reins, and his predecessor, Alan Greenspan, achieved rock-star fame during his long tenure as chairman. But Fed officials still cloaked themselves with a mantle of technocratic detachment from both partisan politics and day-to-day business life. They almost never spoke in public outside the controlled confines of scheduled speeches or Congressional hearings.

Fed policy makers make their decisions about interest rates behind closed doors, then communicate those decisions primarily through brief, cryptic statements that analysts busily decode in the days that follow.

But that kind of distance has become impossible in the two years since the American economy plunged into its worst financial crisis since the Great Depression. These days, Mr. Bernanke and the Fed have been bailing out financial institutions, printing money in unheard-of volumes and stepping in to fill the lending gap left by the crippled capital markets.

Even in better economic times, Mr. Bernanke, who was appointed by President George W. Bush in 2006, would be under pressure to get out the Fed’s message: his term as Fed chairman ends at the end of next January, and President Obama will have to decide in the next few months whether to nominate him for another term or replace him with his own choice.

The Fed has never wielded as much power as it does right now, but the very expansion of its mission has exposed it to more second-guessing and more challenges to its political independence than ever before.

“The Federal Reserve, in collaboration with the giant banks, has created the greatest financial crisis the world has ever seen,†Representative Ron Paul, Republican of Texas, said at a House hearing last week in which Mr. Bernanke testified about the state of the economy.

Republican lawmakers portray the Fed as the embodiment of heavy-handed big government, and have called for scaling back the central bank’s regulatory powers. But liberal Democrats, like Representative Dennis J. Kucinich of Ohio, have accused the Federal Reserve of caving in to demands by banks for huge bailouts, for failing to protect consumers against dangerous financial products and for being too secretive about its emergency rescue programs.

More than 250 lawmakers have signed a bill sponsored by Mr. Paul that would allow the Government Accountability Office to “audit†the Fed’s decisions on monetary policy — a move that Fed officials see as a direct threat to their political independence in carrying out their central mission of setting interest rates.

Even those sympathetic to the herculean challenges confronting Mr. Bernanke acknowledge that the Fed has lost some of its aura of infallibility.

“When you have a terrible mess, it is unlikely that those who try to alleviate the danger of that mess will come out looking clean,†said Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee.

The Fed appears to be fighting for it's life.

Accountability appears to be looming and then maybe some jail terms for some?

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