Paul Solman: The Federal Reserve has long had a reputation for being secretive. Its closed-door policy has fueled suspicions and countless conspiracy theories since the central bank was established nearly a century ago. And since the Fed has moved rapidly and radically since the financial crisis began last year — bailing out some institutions but not others, creating hundreds of billions of dollars, forcing mergers — you can easily imagine what those given to such conspiracy theories might think about the Fed’s evolving role in the economy.
I recently sat down with former Fed Vice Chair Alan Blinder to talk about the unprecedented lengths to which Fed Chairman Ben Bernanke has gone to explain to the public what the Fed is all about – appearing on 60 Minutes in March (which was the first broadcast appearance for a Fed chief since Greenspan went on “This Week with David Brinkley” in 1987) and, of course, sitting down with Jim Lehrer and a roomful of Kansas Citians last weekend to answer questions about the financial crisis and the Fed.
Here’s a brief excerpt from the extended interview below:
Alan Blinder: [I]n this extraordinary set of circumstances, given what [the crisis] has done not only to the financial system but to the entire economy, and that means to the lives of virtually every American, I think the leaders, the financial leaders of this country and I include in that by the way the Chairman of the Fed, the Secretary of the Treasury and top people in financial businesses, owe a debt to society to get out in front and explain things.
I thought it was a landmark when [Bernanke] gave that interview to 60 Minutes. If you’d have asked me a year before that or 6 months before that what’s the likelihood that the Chairman of the Fed goes on 60 Minutes? I would say, ‘You’ve got a better chance of taking your whole family fortune to Las Vegas and putting it on number 36 on the roulette wheel. This is just never going to happen!’ I’m very glad that it did happen.
And on deck for tomorrow: Blinder on what it was like to disagree with Greenspan, whose reputation made it so that it felt like “you were up there on the foothills of Mount Olympus disagreeing with Zeus.” Don’t miss it.