Search
 

Central Banking's Hot Seat

Give the new Fed chairman time to settle in and win confidence

By Robert J. Pedersen | Updated on January 02, 2006

If recent press reports are indicative, Federal Reserve Chairman Alan Greenspan’s successor, Ben Bernanke, will likely face some skeptics, just as Greenspan did (amazing as that may seem today) in his first few years on the job. But imperfect transitions at the Fed have ended up working out rather well over the past quarter century. It’s ancient history now–and few have reason to recall the event–but it may be instructive to note that Paul Volcker got off to a very shaky start as Federal Reserve chairman when in September 1979 he won a dangerously close 4-to-3 vote to hike the discount rate just six weeks into his tenure. And as president of the Federal Reserve Bank of New York for the four years before becoming chairman, he had been a Federal Open Market Committee insider.

Any veteran bond trader also probably recalls June 2, 1987–the day Volcker’s resignation and Greenspan’s appointment were simultaneously announced. That day the 30-year Treasury bond suffered one of its worst sell-offs ever–a 3.375-point free fall that pushed its yield up by more than 30 basis points. Like Volcker, Greenspan hit the ground running, pushing through a tightening of monetary policy after only three weeks on the job.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2025 ALM Global, LLC. All Rights Reserved.