Tucker Publishing Group collaborated with Dr. Marie Bussing, assistant professor of economics at the University of Southern Indiana College of Business, to give 35 students in her Economics 361 Money and Banking course, an upper level class of juniors and seniors, an opportunity to be published in Evansville Business. Students were asked to write about Ben Bernanke, who presented “A Conversation with Ben Bernanke” during the Romain College of Business Innovative Speaker Series on March 23 at USI. Dillon Davenport, who recently graduated from USI, was selected for his piece.
Walking to the podium with a white shirt, grey suit, and a striped tie, he looked as normal as someone would in the audience. The man, Time Magazine’s 2009 person of the year, is referred to as the person who saved the U.S. economy, and has imposed some of the most innovative strategies the Federal Reserve System has ever seen. His name is Dr. Ben S. Bernanke.
Bernanke was born in Augusta, Georgia, and later raised in Dillon, South Carolina, a small rural town. “Dillon makes Evansville seem like New York City,” he jokes. Bernanke shared stories about his wife and how she has kept him grounded by asking him to take out the trash every week and clean the dishes after every meal.
He spoke intelligently, as someone might expect from a Harvard University and Massachusetts Institute of Technology alumnus, but not arrogantly. He is considered one of the most powerful people in the world, and that story began on a Fall weekend in 2008, known as “Lehman Weekend.”
Lehman Brothers, a massive investment bank in New York, was failing. Bernanke says the widespread consensus among economists, politicians, and the media was that it was time to let the company fail. Bernanke, who was serving as chairman on the Federal Reserve, thought differently. They knew if Lehman Brothers failed, it would magnify the crisis and make it worse. Bernanke explains the Federal Reserve brought Lehman, potential buyers of Lehman, and 12 CEOs of top Wall Street investment firms to the New York Federal Reserve to find a solution for this company that was on the brink of collapse.
Unfortunately, the potential buyers dropped out and Lehman Brothers had no collateral for the Federal Reserve to lend the firm cash. Then, the event Bernanke and the Federal Reserve feared would happen did. Lehman Brothers failed, beginning what became known as the recent Great Recession.
After sharing his experiences on 2008, Bernanke took a seat and answered questions from moderator Dr. Karen H. Bonnell, USI professor of communications. One of the questions was: “Do you believe or even acknowledge the existence of a student loan bubble?”
Bernanke’s answer particularly applied to current college students and students wanting to continue their education.
Bernanke says he didn’t believe there was a bubble or that student loans affected the financial sector but did give advice to students seeking financial aid in the form of loans. Bernanke says when students are taking out a loan, they should first develop a sense of whether or not the program they are attending is right for them and whether the program will lead to a job. He also says students should enroll in a program that will lead to a job and will ultimately enable repayment of their student loans.
“It is extremely tough to get out of student loans, not even through bankruptcy,” says Bernanke.
Bernanke testified before the U.S. Congress that his son is on track to leave medical school with $400,000 in student loans.
As former chairman of the Federal Reserve, Bernanke was asked about his most important contribution to the system. He credited the success as a team effort. Bernanke was an academic and needed diverse opinions, solutions, and ideas to solve the unusual and unprecedented problems he faced at the Federal Reserve. He described his leadership approach as collegial, not authoritative. He wanted to involve everyone at the Federal Reserve because of their diverse backgrounds in education and experiences.
When asked about innovative practices he implemented as chairman, Bernanke talked about transparency. He wanted the Federal Reserve’s actions to be open to the public and reach a broad market. Bernanke implemented an explicit 2 percent inflation target, held press conferences, appeared on “60 Minutes,” and spoke to universities about what was occurring at the Federal Reserve. He noted that transparency was in part a failure. In 2009, the Federal Reserve was the most unpopular government agency, even lower than the Internal Revenue Service.
Bernanke served as the chairman of the Federal Reserve for eight years and worked in several additional roles. Currently, Bernanke is finishing a book about his tenure at the Federal Reserve. He also is a member of a think tank at the Brookings Institution. Bernanke will be remembered as one of the most influential people in U.S. history.
For more information about the Innovative Speaker Series at the University of Southern Indiana, call the Romain College of Business at 812-464-1718 or
visit usi.edu/business/speaker-series.
