Low-Key Advisor Fitted for Power Suit

Ben Shalom Bernanke’s first venture onto the national stage ended abruptly. He choked on the word “edelweiss” in the 1965 National Spelling Bee.

The alpine flower was featured in the then-current hit “The Sound of Music,” but the hamlet of Dillon, S.C., had no movie theater. Young Ben had to settle for the rank of No. 26 and forfeit any hope of the winner’s true reward: appearing on “The Ed Sullivan Show,” the most prominent television variety program of the era.

Bernanke, 51, doesn’t seem to have experienced much failure since.

On Monday, he was poised to become one of the world’s most powerful men when President Bush appointed him to succeed Federal Reserve Chairman Alan Greenspan. The summa cum laude graduate of Harvard, former chairman of Princeton’s economics department, former Fed governor and current head of Bush’s Council of Economic Advisors was lauded by colleagues and others as a low-key, self-made, independent, extremely smart fellow who surprisingly made it to the top anyway.

“This is the closest you can come to pure meritocracy,” said Adam Posen, a scholar at the Institute for International Economics and Bernanke’s coauthor on the book “Inflation Targeting: Lessons From the International Experience.”

The most outlandish thing about Bernanke that anyone could come up with Monday was his funky taste -- at least by starched Washington standards -- in attire.

It’s a point Bernanke himself readily acknowledges.

In a speech in January to the American Economic Assn., he said the biggest downside of being a Fed governor was having to wear a suit to work. His proposal that Fed governors start wearing Hawaiian shirts and Bermuda shorts had gone nowhere, he complained.

That’s typical of Bernanke’s wry sense of humor and affable manner. Those homespun qualities should assist him in achieving his long-held goal of demystifying the nation’s central bank. They could also aid his survival in political Washington, a place where the Fed’s role can often become contentious.

“He’s very easygoing and friendly, someone you would like immediately,” said Laurence Kotlikoff, an economics professor at Boston University. “He knows how to explain to the public what’s going on without making it unintelligible.”

One small example is Bernanke’s explanation of the difficult nature of economics. He compares it to learning how to repair a car while it is still running.

“This is not somebody who is full of himself or has to show he’s the smartest guy in the room,” said Columbia University Business School economist Frederic Mishkin, who has known Bernanke for nearly 30 years and collaborated with him on a book and several articles.

Bernanke’s apolitical nature is an asset, the professor said. “There is always the fear [Fed chiefs] might do the White House’s bidding” because they were appointed by the president. But with Bernanke, “it’s not Republican economics or Democratic economics, it’s just good economics,” Mishkin said.

Until three years ago, when he was appointed to fill a Fed governor’s unexpired term, Bernanke’s entire adult life has been spent in academia. In the American Economic Assn. speech, he said that “the sum of my political experience” consisted of two terms on the Montgomery Township, N.J., school board, near his post at Princeton.

Education was a matter of deep concern: His wife, Anna, was a middle-school Spanish teacher, and their two children attended local schools. Bernanke recalled that he and his fellow board members were “trashed alternately by angry parents and angry taxpayers.”

On a nine-member board, his was the swing vote.

“When he came on board, there were four people who voted against everything, no matter what it was,” said Linda Romano, board president in that era.

Bernanke’s faction pushed successfully for the building of new schools. Despite the emotions engendered on all sides, Romano said, “he wasn’t in your face, he didn’t push things on you or say, ‘I know what I’m talking about, listen to me.’ But you knew he was right.”

Another board member, Reginald Luke, said that “no issue was too small for him.” Even so, Luke said he and other school officials couldn’t help teasing the brainy economist from the Ivy League school.

“We always kind of made fun of him, with his tweed coat with the arm patches and no tie,” Luke said. “Typical Princeton.”

In his American Economic Assn. speech, Bernanke also described his administrative skills: “I served seven years as the chair of the Princeton economics department, where I had responsibility for major policy decisions such as whether to serve bagels or doughnuts at the department coffee hour.”

At Princeton, one of his hiring coups was Paul Krugman. Now an op-ed columnist for the New York Times, Krugman is one of Bush’s most prominent and savage critics among economists. This does not seem to have counted against Bernanke. Krugman didn’t return a call for comment.

Much of Bernanke’s academic life has been devoted to exploring the origins of the Great Depression -- “a situation,” he explained to U.S. News & World Report in 2003, “where bad economic thinking had very large and direct effects on human welfare, including being a major cause of World War II.”

His 2000 book, “Essays on the Great Depression,” got enthusiastic if limited reviews. His new prominence is attracting some of the readers the book missed the first time around: The book’s sales ranking on Amazon.com soared from 260,054 on Sunday to 468 on Monday evening. It, and his copious other writings, including two standard economics textbooks, will be scoured for clues to his actions as Fed chairman.

His parents -- Philip was a druggist and Edna a homemaker -- say they don’t have any idea what powers him, but it began early.

Bernanke got 1590 out of 1600 on his SAT. His school didn’t offer calculus, which he needed to get into Harvard, so he taught himself. He played saxophone in the school marching band. He worked in his father’s drugstore (“He checked in the comic books, and read them all,” Philip Bernanke said). He was valedictorian. He spent one summer as a waiter at South of the Border, a mammoth pit stop on Interstate 95. During another he helped build a hospital.

“He would come home for lunch, covered with concrete dust,” his father remembered Monday. “Other teenagers worked there too. It was too hot and hard for them. They quit. But Ben wouldn’t give up. That’s his way.”

Philip Bernanke added another thought: “He likes problems, the more the better.”

As Fed chairman, Ben Bernanke will have no end of those. But on one hot-button issue -- whether anything needs to be done to prick what some say is a housing bubble -- he seems to have made up his mind.

During a talk at Stanford University this year, Bernanke reminisced about moving to Silicon Valley in 1979 as an assistant professor of economics in the university’s graduate school of business.

“We were hesitant to buy a house since I was certain that prices could never stay as high as they were at that time,” he said to an audience composed of people who knew perfectly well that any home in the area had easily tripled or quadrupled in the last 25 years. “Since then I’ve developed a view that central bankers should not try to determine fundamental values of assets.”

Or as Bernanke put it more formally in an interview published by the Minneapolis Fed last year: “If a bubble does exist, there is no guarantee that an attempt to ‘pop’ it won’t lead to violent and undesired adjustments in both markets and the economy.”

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Ben S. Bernanke

Age: 51, born Dec. 13, 1953, in Augusta, Ga.

Current position: Chairman, President’s Council of Economic Advisors, June 2005-present

Education: Bachelor’s degree in economics, Harvard University, 1975; doctorate in economics, Massachusetts Institute of Technology, 1979

Previous jobs: Member, Federal Reserve Board of Governors, 2002-05; chairman, Princeton University economics department, 1996-2002; professor of economics and public affairs, Princeton, 1985-2002; professor of economics, Stanford University, 1979-85

Family: Wife, Anna; two children