Reuters explains Ben Bernanke’s new gig:
Former Federal Reserve chairman Ben Bernanke is joining bond giant Pimco as a senior adviser, as the firm seeks to bolster its star power following the departure of co-founder Bill Gross.
The move may be questioned by some competitors who had criticized the Fed during Bernanke’s reign for being too close to Pimco, whose full name is Pacific Investment Management Co. The critics suggested that could have potentially given the Newport Beach, California-based firm an advantage in interpreting monetary policy.
In an interview, Bernanke, who only last week announced he’d signed on to consult for the hedge fund Citadel, said he will restrict his Wall Street advisory roles to just the two firms. He also works at the Brookings Institution.
“The Fed does not regulate Pimco or its parent or any other firm that is affiliated with it,” Bernanke said. The same situation obtains with Citadel, he said. “So there is no contact.”
Now there is some concern over hanky panky:
In late 2008, the Fed hired Pimco, along with three other big Wall Street firms, to implement enormous purchases of agency mortgage-backed securities to keep interest rates low and spur the U.S. economy. Pimco also managed the commercial-paper assets for the Fed during that period.
“If they were employed to do that kind of thing, that was in their professional capacity,” Bernanke said. “I had nothing to do with selecting them or I had no involvement with them myself.”
When asked if he has advised Pimco to prepare for an expected interest rate hike this year, Bernanke said: “No, I haven’t given them any advice on that. I will be speaking broadly about the economy and markets.”
All told, Bernanke said: “From my perspective, they are a firm that the way they operate is by taking a macro view — they try and decide how they see the economy evolving both in the United States and abroad and they base their investment strategies on that macro view. That’s something where I believe I can be helpful, thinking about where the economy is going.”
That sounds entirely plausible. Just look at Bernanke’s resume when it comes to forecasting movements in the macroeconomy: