Former Federal Reserve Board Chairman Ben Bernanke announced last week that he had accepted an offer to become a senior advisor to a hedge fund.
Wall Street howled that Bernanke had done something so wrong that it was close to criminal. For example, take a look at this piece from CNBC where one trader was quoted as saying that taking this job would make the former Fed chairman “one of the most vilified people of the 21st century.”
There was also the usual complaints from pundits about how wrong it was for Bernanke to have accepted this position. Matt O'Brien at The Washington Post said it was “a little disappointing that everyone who goes into public service ends up trading in on that to Wall Street." Matthew Yglesias at Vox said Bernanke needed an excuse to take the job. The San Francisco Chronicle said Bernanke joining the hedge fund was an example of the spinning door between Wall Street and Washington and called it a “sad practice.”
(For the record, Nathan Vardi of Forbes said Bernanke taking the job “makes a lot of sense in many ways.”)
The reaction on Wall Street was the most ridiculous. This is the fortress of free enterprise and the citadel of capitalism; the idea that anyone there would be shocked, dismayed and outraged over what was the equivalent of an entrepreneur cashing in on his sweat equity investment is absurd.
You have to wonder whether much of the negative reaction on the street to Bernanke taking this job was really because he was joining a competitor.
The pundits' likely had a different motivation for their negative views but it was no less ridiculous for a number of reasons.
First, taking the job wasn't legally prohibited.
Second, it was anything but unprecedented. In fact, as this piece from the New York Times pointed out, it essentially is standard practice.
Third, this wasn't at all an example of a spinning door between Wall Street and Washington. Bernanke’s immediate jobs before becoming Fed chairman were in government, and he came to government from academia. It would have been more of a spinning door if he had returned to Princeton.
Fourth, not everyone who goes into public service ends up trading on Wall Street, and so what if they did? Do we really want people who often make tremendous professional, personal and compensation sacrifices by accepting a government position to then be prohibited from taking high-paying jobs in the private sector when their service has ended?
The only thing Ben Bernanke did wrong last week was that he offered several reasons for taking the hedge fund job; He absolutely does not need to explain himself.
My take: “Congratulations. Good luck. You deserve it."
