Roger W. Ferguson Jr., the vice chairman of the Federal Reserve Board, resigned Wednesday. So, what does it all mean?
For interpretation, we turn to the reporters watching the Federal Reserve (not to be confused with “Fed watchers,” which is what these reporters often call their anonymice who, of course, lend a hand with the interpreting).
At the Fed’s hometown paper, the Washington Post, the headline read: “Fed Vice Chairman Resigns; Adding to Turnover at the Top.” In the first two paragraphs the Post’s Nell Henderson reports that it is a “time of transition” at the Fed, that the timing of Ferguson’s resignation (“just three weeks after Ben S. Bernanke succeeded Alan Greenspan as Fed chairman”) “leaves the Fed without the crisis-management experience of the top two officials who had led the central bank through international financial turmoil and terrorist attacks over the past eight years.” Moreover, “Bernanke … is untested in crises, noted several analysts [anonymice alert!] who had expected the new chairman to be able to draw on Ferguson’s experience if the stock market crashed, the dollar plummeted or some other turbulence erupted.”
To hear Henderson tell it, Ferguson’s resignation leaves the Fed a little bit in the lurch. (Cue talking head — in this case, a “Fed watcher” with a name — to underscore the point: “‘The timing [of Ferguson’s departure] is a little awkward, losing both the chairman and vice chairman in short order,’ said Ethan S. Harris, chief U.S. economist at Lehman Brothers. The Fed board is ‘becoming a fairly inexperienced group as people keep peeling off.’”)
It’s a different story over at the New York Times where Louis Uchitelle informs readers that Ferguson’s resignation was not unexpected but that “the surprise was that he left so soon after Ben S. Bernanke replaced Mr. Greenspan on Feb. 1.” And why did he leave so soon? To Uchitelle’s eye, the timing “suggest[s] that the transition to a new chairman was going smoothly enough for Mr. Ferguson to leave early.” (Cue talking head — another named “Fed watcher”— to underscore the point: “I think his departure is more a sign of stability and consensus at the Fed than a reflection of disagreement,” said Edward M. Gramlich, a former Fed governor who left the board in September and is now interim provost at the University of Michigan.) To read Uchitelle’s first several paragraphs is to learn that things are fine and dandy at the Fed.
Meanwhile, Henderson reports in the Post that in addition to personnel changes, “Fed policy also is in flux.” Readers learn that Ferguson “has disagreed publicly with Bernanke on one issue” — that of “establishing a numerical target for inflation” (Ferguson is opposed). Henderson does not say whether this disagreement may have played a part in Ferguson’s resignation, but the Times’ Uchitelle clarifies: “Mr. Ferguson and Mr. Bernanke have differed mildly on inflation policy and there was speculation among Fed watchers — none of it on the record — that their differences might have contributed to Mr. Ferguson’s resignation.” Just a “mild” disagreement, according to Uchitelle, the stuff of idle “speculation” by “Fed watchers.”
What about the fact that Bernanke — not Ferguson — was named Greenspan’s successor? Did that affect Ferguson’s decision to go? Here is a point on which the Post and the Times agree. “As a Democrat, [Ferguson] was never a serious candidate to succeed Mr. Greenspan,” reports Uchitelle in the Times. In the Post, Henderson says much the same, observing that “during the 2004 presidential race, many analysts viewed Ferguson, a Democrat, as a strong candidate to succeed Greenspan if Sen. John F. Kerry (D-Mass.) were elected president.”
But that’s not what they’re saying on the floor of the Chicago Mercantile Exchange, which is where CNBC found its “Fed watchers.” Said CNBC’s Rick Santelli yesterday: “You know, initially the talk [at the Exchange] was that probably as vice-chairman, not getting picked to succeed Mr. Greenspan might have put the notion that once the transition was carried through, that [Ferguson] would probably leave … [T]his is what traders were discussing, But as the day wore on, the newer story seemed to be that … there may have been a disagreement regarding targeting certain levels of inflation… so there may be more to this than just the notion that as vice-chairman he didn’t get picked to be the chairman, but no matter how you slice it, traders agree he did it in a very classy fashion, of course, waiting until a month after Mr. Bernanke was appointed.”
The (admittedly tortured) moral of this (admittedly long-winded) story? Harmony (or lack thereof) at the Federal Reserve is in the eye of the “Fed watcher.”