Market Update: The financial markets are in full swing — and Barry Schwartz, Top 50 producer and mortgage advisor with PERL Mortgage, explains the the relationship between rates and bonds, unemployment reports, our favorite Fed Chair, Ben Bernanke, and why some mortgage rates differ between products and programs.

Click the play button to listen!

Ben Bernanke: Steering the Ship Through The Storm

The Chairman of the Board of Governors of the Federal Reserve, known more colloquially to market insiders as the “Fed Chief” is not just the active executive officer of the Board, but also, in most cases, the public face of American monetary policy. The Fed Chief is looked to by the public and the media during times of financial crisis as well as financial boom, for guidance and assurance that the economy will survive. Since 2006, that public face has belonged to Ben Bernanke.

Originally hailing from Georgia and South Carolina, Bernanke graduated summa cum laude from Harvard University in 1975 with a bachelor’s degree in economics, and achieved his doctorate in 1979 from MIT. Bernanke specializes in macroeconomics, which examines the workings of an entire economic system (such as those of nations, continents, and the entire world) and tries to determine its future behavior. In 2002, when Bernanke was first appointed to the Board of Governors, he made fighting deflation a priority, delivering a speech that outlined actions the Fed could take—a plan that became known as the “Bernanke Doctrine.”

The Bernanke Doctrine notes seven steps that the Fed should take:
1. Increase the money supply.
2. Ensure the liquidity of the financial system through various appropriate measures.
3. Lower interest rates, even as low as zero percent.
4. Control the yield on corporate bonds and private securities.
5. Depreciate the US dollar.
6. Buy vast amounts of foreign currency, causing a de facto depreciation.
7. Buy industries in the US economy using newly created money.

Since being appointed Fed Chief, his tenure has seen the Fed experience an unprecedented increase in its power, but has also been rife with controversy and contention. Desiring to institute a more transparent Federal Reserve than his predecessor, Alan Greenspan, Bernanke spoke a number of times to the media in his first few months as Chief, only to discover that any comments made about Fed direction caused the stock market to be affected. Bernanke has also been a central figure in allegations of fraud regarding the 2008 merger of Merrill Lynch and Bank of America, and has come under fire for his role in the AIG bailout.

Bernanke has spent a great deal of his career as an economist analyzing the factors that led to the Great Depression, and his theories have informed his handling of the current financial crisis. While some have claimed that his actions and ideologies as Fed Chief are partially responsible for leading us into the current recession, others have defended him, stating that his work has helped keep the crisis from worsening, and that his ideas may yet bring the economy back from the brink. When his first term as Fed Chief ended in 2010, he received a show of support from President Obama, who nominated him for a second term. He was affirmed by the Senate and will serve in that capacity until 2014. Time will tell if his tenure as Fed Chief will be remembered for pulling us out of the economic crisis or for failing to do enough.

Last week, current Federal Reserve Board Chair Ben Bernanke was reconfirmed for another four years by the United States Senate in a 70-30 vote. Who is Ben Bernanke, and what exactly does the Fed chair do? PERL Mortgage Advisor and top 200 producer Barry Schwartz explains the role of the Fed and its current leadership.

Click the play button to listen!