"It's just money. It's made up. Pieces of paper with pictures on it so we don't have to kill each other just to get something to eat."
-- Jeremy Irons as CEO John Tuld of an investment bank from the film Margin Call
I read from somewhere that there are only two kinds of emotions that govern Wall Street -- fear and greed. Well, supposing if that were always true, then it would be so just the same during good times as well as bad, bull market as well as bear market. Therefore whatever the times, someone has to be there in the midst of it all, as the adult.
Supposedly it was said that when the legendary quarterback and winner of four Super Bowl Championships, Joe Montana, had left the NFL, a question was asked to him. Why not coach?He supposedly answered, "Listen, I have four kids of my own. I don't need 53 more." And in that answer, those who heard it heard the words and wisdom of an adult.
One hundred years ago, the United States Federal Reserve System came into existence to be the central bank of the U.S. Its main role is to provide elastic currency, as well as to be exigent whenever financial emergencies may befall in the U.S.
And throughout those many years, there have been 14 appointed individuals who were willing to step up, to be the adult, to be the Chairman of the Federal Reserve. So we have to this day, and currently serving his second term, the 14th chairman of the Fed, Ben Bernanke.
Undeniably intelligent, soft-spoken, and with a cautious demeanor it has been said about him, Ben Bernanke had gone off to study economics after graduating Dillon High School in South Carolina. Said to be very good with numbers, he went to two of the finest schools in the nation, Harvard University and the Massachusetts Institute of Technology (MIT). But story has it, Harvard almost didn't happen.
According to the CBS 60 Minutes interview with Scott Pelley on December 4, 2010, the parents of the future 14th Chairman of the Fed did not want their son to go to Harvard, so said Ben Bernanke. Concern about not having the right clothes came from the mother. And in the book In Fed We Trust by David Wessel, UNC-Chapel Hill was considered just as good, coming from the father. But also in the book, came the underlying concern from the parents about their son over a probable loss of Jewish identity once at Harvard. Enter local African American friend who is six years older than Ben Bernanke, who also attended Harvard, and is now a Professor at MIT, Kenneth Manning, who sincerely reassured the parents. That has not and will not happen at Harvard, period.
Next there is his career trajectory, starting as Assistant Professor of Economics, Associate Professor of Economics, Visiting Professor of Economics, Professor of Economics and Public Affairs, to eventually member of the Board of Governors of the Federal Reserve System, and Chairman of the President's Council of Economic Advisers before his appointment to Chairman of the Fed. All of which having another thing in common. He didn't do it all for the money.
How do we know this? He said so himself, a few days ago this month, as part of his speech during a commencement address held at Princeton where he formerly taught, "A career decision based only on money and not on love of the work or a desire to make a difference is a recipe for unhappiness."
Because let's face it. Saying you are a Professor of Economics and Public Affairs at dinner parties does sound honorable and with status. But to some here in America, not as high-powered-sexy compared to, say, you are Head of Capital Markets at Deutsche Bank, NY. Which does happens to be the same title held by the character Jared Cohen, acted by Simon Baker (from The Mentalist TV), at a nameless investment bank in the 2011 financial thriller film Margin Call.
Economic expert for About.com, president of WorldMoneyWatch.com and also educated at MIT, Kimberly Amadeo explains that as mortgage-backed securities were the first CDOs (Collateralized Debt Obligations) to tank starting in 2007, that even the banks selling the CDOs didn't know their value. Complex computer models based the assumption of the value of CDOs price going up, as housing prices also went up. But as housing went down, CDOs had no value as it could not be priced.
This is exactly what happened in Margin Call, a film about a 36-hour period at a Wall Street investment bank at the beginning of the 2008 financial crisis. One scene involved actors Kevin Spacey as Sam Rogers_ Head of Sales and Trading, and Jeremy Irons as John Tuld, CEO and Chairman of the Board. The website www.rottentomatoes.com gave the film an 88 percent rating!
J. Tuld: "This isn't the last situation that we're going to have to deal with this week. This is
just the start."
S. Rogers: "It's the start because you're starting it."
J. Tuld: "Maybe, but I don't believe that. Not this time. I mean the numbers just don't add up
S. Rogers: "I agree with you there. I've been saying that for years."
While Chairman of the Fed during the crisis, he went at, using also one such unconventional, or some may say riskier among other tools at his disposal, quantitative easing (QE). The plan, to buy mortgage-backed securities at $40 billion a month to ease the commercial housing market of debt risk, with the Fed having a third round (QE3) the fall of last year. He studied the Depression during graduate studies at MIT. And it stuck.
Still while Chairman of the Fed, he has come under fire, for the TARP (Troubled Asset Relief Program) bailouts, quantitative easing, and also being called treasonous by Texas Governor Rick Perry at a presidential campaign stop in Iowa on August 15, 2011. Yet on November 10, 2011, Chairman Bernanke visits the Army Base Fort Bliss in El Paso, Texas for a town hall meeting to address the concerns of soldiers during a weak economy.
Everyone is entitled to their own opinion about Chairman Ben Bernanke. Or what they see him as. Yet I also agree with Morgan Housel of The Motley Fool in his May 31, 2013 article, You Have No Idea How History Will Judge Ben Bernanke. Yet I see him, with eight months left in his term, as a platoon sergeant from those classic WWII movies, guiding the platoon to use knives or bayonets to probe the soil through a minefield. To stay clear of any German S-mine also known as the "Bouncing Betty." That's right, as we negotiate our way through this economy I now see him as that. And I also see him as Man at the Helm: Ben Bernanke.