Fed chief Jerome Powell’s humility will be appreciated
Jerome Powell’s absence of arrogance is a big positive after the “ivory tower” air of some of his Fed predecessors.
“It’s a language of purposeful obfuscation to avoid certain questions coming up which you know you can’t answer,” he said. “I proceed with four or five sentences, which get increasingly obscure. The congressman thinks I answered the question and goes on to the next one.”
He got away with it because he had the luxury of supervising a booming economy. Then, the year after he left, everything came crashing down and ever since American politicians have blamed the Fed for helping to cause the financial crisis and prolonging its effects.
Even if one takes the view that waffling about nothing is better than spooking markets with something close to facts, as Mr Greenspan so often did, it comes across as arrogant. And politicians hate arrogance, especially so in the post-crisis age when the Fed remains in the bad books.
Ben Bernanke and Janet Yellen, Mr Greenspan’s successors, had to be more direct.
In front of Congress, Ms Yellen, chairwoman of the Fed until a few weeks ago, had an enviable ability to be intentionally dull and sometimes evasive but disarmingly charming at the same time. Maybe it had something to do with her small stature and unusual speaking tone, which earned her something of a cult following. When giving testimony in Congress, she leant forward confidently, hands clasped together and head tilted up, looking her questioners straight in the eye as she answered.
On Tuesday, Jerome Powell, Ms Yellen’s successor, received his first grilling on Capitol Hill. His performance was different. His head was angled down as he strained to look up at his questioners from the House financial services committee, answering them in monotone. Throughout the hearing, his body language was awkwardly compact. Sometimes he crossed his arms at the wrists and pulled them close to his body while speaking; often he fiddled with his papers or played with his pen cap.
There are problems with coming across as socially awkward. One is that politicians like to jump on introverts for a bit of opportunistic grandstanding. Another is that it doesn’t play well on social media, where dull, four-hour-long congressional hearings need to be chopped up into a few bright, seconds-long sound bites. There is nothing wrong with being an introvert, but Americans like their leaders in Washington to exude confidence.
The big positive was what appeared to be Mr Powell’s absence of arrogance. Ms Yellen and Mr Bernanke suffered from a perception that years spent in academia had imbued them with a certain detachment from the man in the street. They showed flashes of frustration if they believed that a certain line of questioning was below them.
Mr Powell, a Wall Street banker rather than an academic economist, could offer an antidote to this “ivory tower” effect.
In the most passionate speech of Tuesday’s hearing, David Scott, a Democrat, implored Mr Powell to save poor African-American families from the Trump administration. Later, Al Green, another Democrat, asked Mr Powell to do something about the persistently high unemployment rate for African-Americans.
These were, Mr Powell said, important issues that he took to heart, agreeing that “invidious discrimination” still existed in America. At the same time, he said, rightly, that the Fed did not have the “tools” to attack the problem at the heart, it being a matter for Congress.
When he responded, it was with genuine deference and any flash of frustration seemed to be from his knowledge that he had little or no power to help. On the big stage of American public opinion, where distrust of government organisations is soaring alongside the country’s gross inequality, this humility will play very well indeed.
The Times
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Alan Greenspan was not a man for plain speaking. In a television interview in 2007, the former Federal Reserve chairman explained why he had invented Greenspeak, an obtuse language designed to flummox financial markets and politicians on Capitol Hill.