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Ben Bernanke's legacy: Final chapter yet to be written

When Ben Bernanke puts on his coat and leaves his office Friday, he will close the door on a precedent-breaking eight years as chairman of the Federal Reserve.
By The Associated Press Published: January 31, 2014
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When Ben Bernanke puts on his coat and leaves his office Friday, he will close the door on a precedent-breaking eight years as chairman of the Federal Reserve.

What's next? Bernanke has said he plans to stay in Washington to write books and give speeches. Liberated from the constraints of the Fed, he'll have more time for his favorite pastime, reading. He'll even get to drive a car for the first time in eight years.

Bernanke took office on Feb. 1, 2006, more the shy Princeton professor than a likely combatant in Washington's knockdown political culture, though he'd served on the Fed's board and for eight months as head of President George W. Bush's Council of Economic Advisers.

On his watch, the U.S. economy and financial system fell into their gravest crisis since the Great Depression.

As a student of the Depression, Bernanke felt policymakers then had been too hesitant to deploy the Fed's powers. Under his leadership, the Fed invoked all its conventional tools. Once those were exhausted, Bernanke turned to extraordinary steps never before tried by the Fed.

Besides cutting a key short-term interest rate to a record low near zero, Bernanke launched a bond buying program that drove the Fed's balance sheet above $4 trillion to try to accelerate growth and shrink high unemployment.

Bernanke's policies drew praise but also warnings that they injected new risks that will endure beyond his tenure.

Here are highlights of his chairmanship:

Housing boom and bust

Bernanke and other regulators failed to foresee the risks that would flare once the prolonged housing boom went bust. The housing bubble was fueled by subprime mortgages sold to homeowners and then repackaged as securities. Once the bubble burst, those mortgages threatened financial institutions and investors.

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