President Bush Names Ben Bernanke as Next Federal Reserve Chairman

President Bush's selection of Princeton University economist Ben Bernanke to succeed Alan Greenspan as chairman of the Federal Reserve's Board of Governors is seen as a move that will likely continue policies aimed at maintaining a low and stable rate of inflation. This goal is expected to be welcomed by the insurance industry, which relies heavily on bonds and is sensitive to inflationary pressures. Bernanke's academic record and experience make him a well-qualified candidate for the position, and he has been credited with advocating greater transparency for the Fed. Insurers are likely to appreciate his stated goal of keeping inflation low, as this will help to maintain the value of their bond investments.

Key Takeaways:

• Ben Bernanke, a Princeton University economist, has been named by President Bush to succeed Alan Greenspan as chairman of the Federal Reserve's Board of Governors.
• Bernanke has served as chairman of the Council of Economic Advisers since June and has been a professor at Princeton since 1985.
• He is known for advocating greater transparency for the Fed and has stated that he wants the Fed to announce targets for inflation.
• Insurers are likely to welcome Bernanke's selection, as he has a stated goal of keeping inflation low, which would help to maintain the value of their bond investments.
• Robert Hartwig, chief economist for the Insurance Information Institute, noted that a Fed chief with a goal of keeping inflation low is the best friend the insurance industry could have.
• The American Insurance Association has commended Bernanke's selection, citing his credentials, experience, and grasp of the real world implications of public policy decisions.
• However, Bernanke's views on the property insurance industry's most pressing legislative priority, extension of the federal backstop for terrorism insurance, differ from those of the industry and even Greenspan.

Statistics:

• The Dow Jones Industrial Average rose 1.66% on October 24 to close at 10,385.
• The high-tech Nasdaq Composite Index was up 1.61% to close at 2,115.83.
• Bernanke received his undergraduate degree from Harvard University in 1975 and his doctorate from the Massachusetts Institute of Technology in 1979.
• He has been the chairman of Princeton's economics department since 1996.

Sources:

• A. M. Best via COMTEX
• Robert Hartwig, chief economist, Insurance Information Institute
• Leigh Ann Pusey, senior vice president of government affairs, American Insurance Association
• Ben Bernanke, Princeton University economist
• President Bush's announcement of Bernanke's selection