Bernanke Charts New Mission for the Fed: Financial Stability
By Donna Borak
While by law the Federal Reserve Board must worry about price stability and unemployment, Chairman Ben Bernanke appears to have charted a third mandate for the central bank: financial stability. In his speeches, lectures and testimony, Bernanke has steadily elevated the importance of the issue as his agency’s responsibilities have swelled under Dodd-Frank. But Bernanke has also encouraged the Fed to embrace its new role. “It’s a new piece of the Chairman’s legacy,” said Karen Shaw Petrou, a managing partner at Federal Financial Analytics Inc. Bernanke, who like his predecessor is seeking to use monetary policy to stabilize the economy, is “going to be judged not only on that, but whether in fact he does leave a legacy of financial regulation that promotes stability. “That’s never been the case before. That’s never been a criterion for judging the central bank,” she added.