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Bernanke Press Conferences Are More Significant Than The New York Times Says

28 Mar 2011
Posted by Stan Collender

This story in yesterday's New York Times by Binyamin Appelbaum about how Federal Reserve Board Chairman Ben Bernanke now plans to hold regular press conferences about Fed policies and projections is actually far more interesting and important than is reported.

My sources in the Fed told me almost a year ago that, in the wake of the criticism the Fed was receiving about its handling of the financial crisis, Bernanke had made a decision to speak publicly more often and to a much wider audience than either the Fed or he had ever done before.  I was told that Bernanke had decided that he was going to have to talk to the public one way or another and, rather than wait for a problem to occur and then have to defend his actions to an audience that hadn't heard much from him directly, he preferred for the Fed to establish a rapport and talk proactively.

The story also misses one of the other key reasons Bernanke will be communicating more often and more directly to an audience most Fed chairs have essentially ignored: Voters.  As I said in this post last August, Bernanke painted a big bullseye on himself and the Fed in his speech at Jackson, Wyoming, and Congress started to use him and it for shooting practice almost immediately after Election Day.  To most voters, the Fed was just part of the federal bureaucracy and Bernanke was mostly known by how others characterized him. The press conferences are obviously part of a new strategy to correct this problem with Bernanke essentially going over the head of individual members of Congress and talking directly to their constituents.

As the Times story explains, the most obvious manifestations of this change in communications strategy so far have been the two 60 minutes interviews Bernanke has done.  The press conferences will obviously be an even bigger step.

I'm baffled. Appelbaum

I'm baffled.

Appelbaum begins his piece like this: "Ben S. Bernanke will become the first Federal Reserve chairman to hold regular news conferences as he seeks to improve the central bank’s image."

So, with a library-shelf full of evidence that communication is important as a means of transmitting policy and making it effective, Appelbaum opens his bit of "news" reporting by saying Bernanke is doing this because he wants us to like him better. When I first read Appelbaum's piece, I was struck by the sheer small-minded smugness of it. Does he have a source telling him, in this news piece, that the Fed wants us to like them better? No. Is it evident from the Fed's own material? No. So Appelbaum, in the very first line of a piece that pretends to be news reporting, is making up a small-minded reason for the Fed to do what it plans to do, to match his small-minded view of what's important.

Would the Fed like us to like them better? Oh, probably. Is that their first-paragraph reason for doing what they are doing? Oh, probably not. It's just the first thing that leaps into Appelbaum's thoughts.

Now, I appreciate that this blog is not meant to report news, so if you want to agree with Appelbaum's view, that's fine. What's confusing me, though, is the apparent conclusion on your part that Appelbaum's "news" piece did not wander far enough from source material and expert view, that it didn't pay enough attention to the inside-the-beltway aspects of the Fed's new policy. I'm not sure how Appelbaum could have put more emphasis on the nudge-nudge approach to journamalism.

Real reason for Bernanle's action? Its impact?

OK, so Bernanke is going to do more news conferences or whatever. I'm sure this is not just to show, he's a nice guy, which he is, but a decision based on practicalities of one kind or the other. Is this in a way to support Obama's administration, or pushed by Obama/Treasury? Is it a way to help moderate Republicans, like Lugar, who the WSJ said today is going to have the fight of his life, coming from a socially conservative state, and having the Tea Party solidly against him (and from your earlier post, we know what they're like)? Is it a way to defend Fed policy during the period of crisis, whether it leads to inflation, deflation (American dollars lowered value_, interest rate spike whatever. With the trouble in Japan, the Middle East, and still in Europe - as Maya McGuiness said - we may be the best looking horse in the glue factory - but we have our own major federal state and municipality problems, and sooner or later we'll come under closer examination by our foreign creditors, that wonderful group of sharks known as hedge fund managers, et al.

#2 -- Is this going to have any real impact? People get pretty set in their ways, and I'm thinking that the Tea Party members you had the special privilege to see in action, or Fox News, or Rush Limbaugh are going to pay any attention whatsoever. Will the 33%+ who are independents pay any attention? This is pretty sophisticated stuff, and maybe NYT, WSJ, or Post readers will learn about it (and come to what conclusions they do), but - let's face facts - what % of the country gets its news from newspapers? Public TV, for which funding is cut? Main network TV stations? You know better than me, but my guess is not much - Bernanke may even want it to have an impact, but this could also be CYA or "I told you so"....

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