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(4,571 posts)
Sat Apr 18, 2015, 11:44 AM Apr 2015

Ben Bernanke (like his peers) joins hedge fund

First things first: Ben Bernanke’s decision to start advising the giant hedge fund Citadel in no way tarnishes his historic and heroic stint of public service... (you can read the rest of the apple-polishing at the link)

Nor is Bernanke’s decision to work with a financial firm unprecedented. In fact, forget solar and hydroelectric power—engineers should harness the energy generated by the revolving door between Washington and Wall Street. Former US Treasury secretary Tim Geithner is now ensconced as president of private-equity company Warburg Pincus. Ex-Fed governor Jeremy Stein joined BlueMountain Capital, a hedge fund, earlier this year. Former SEC chair Mary Schapiro is now an executive at influential consultancy Promontory Group. US president Barack Obama’s former head of the Office of Management and Budget works at Citigroup’s investment bank. And Obama’s former chief of staff William M. Daley now works for a Swiss hedge fund. The list goes on. The reason? The pay, of course.

In a chat with the New York Times, Bernanke declined to say what he’ll make for his work at Citadel. But he stressed that he had been approached by banks before and had declined their offers. He said he ruled out working for any bank that’s regulated by the Federal Reserve, and opted for Citadel because it isn’t. ”I wanted to avoid the appearance of a conflict of interest,” he told the Times.

Unfortunately, that’s an impossible goal. By taking a lucrative Wall Street gig, Bernanke can’t help but reinforce the paranoid positions of the world’s Zero Hedge readers, who argue that the Federal Reserve is really just an elaborate conspiracy aimed at enriching a financial plutocracy.

Moreover, the fact that Citadel isn’t regulated by the Federal Reserve doesn’t mean that it shouldn’t be. The $25 billion hedge fund is a high-frequency trader, the kind of entity that’s playing an increasingly important role in the functioning and stability of our most important financial markets. Just a couple days ago an executive at the Federal Reserve Bank of New York gave a speech noting that the rise of electronic and automated trading strategies has introduced new risks into the market for US government bonds, one of the largest and influential markets in the world. He pointed to last year’s so-called US Treasury flash crash as an example of the impact. What if a particularly disorderly bout of trading in the market for US government bonds fuels calls for more regulation of the type of firm that Bernanke is now joining?

In such a debate, Bernanke’s opinion would and should be discounted in light of his arrangement with Citadel. Indeed, even if questions about regulation don’t center on his exact corner of the financial markets, his opinion will likely hold less sway. (That’s not to say his opinion has been purchased, but it should always be noted that he is now being paid to advise a private-sector firm.) That’s definitely a change for a man whose voice and thoughts on the markets have been incredibly influential in recent years. But when academics and policy makers move to Wall Street, that’s—rightly—the cost they pay.


Ben Bernanke (like his peers) joins hedge fund (Original Post) ND-Dem Apr 2015 OP
yup. make a ton of money adding zero value to society. PowerToThePeople Apr 2015 #1
yes, yes, he saved us from Great Depression 2. Of course he did. Workers make less ND-Dem Apr 2015 #2
"He said he ruled out working for any bank thatís regulated by the Federal Reserve". n/t PoliticAverse Apr 2015 #3


(9,610 posts)
1. yup. make a ton of money adding zero value to society.
Sat Apr 18, 2015, 11:47 AM
Apr 2015

Such a great person. We should all look up to him with admiration.



(4,571 posts)
2. yes, yes, he saved us from Great Depression 2. Of course he did. Workers make less
Sat Apr 18, 2015, 11:58 AM
Apr 2015

than before, unemployment is still high, US GDP is higher than ever & labor's share is lower than ever.

Where's it all going?

To fuckers like Bernancke and their no-borders hedge funds.

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