A painting of 10 stiff-necked politicians and bankers, all grouped around president Woodrow Wilson (pictured), commemorates the founding of the US Federal Reserve 100 years ago. Pen in hand, Wilson sits at a large desk poised to sign into reality America’s first central bank. The inaugural chairman is Charles Sumner Hamlin, first and last lawyer to head the organisation. The creation of the Fed was largely a reaction to financial uncertainties of the time.
As Wall Street collapses and factories shut down, Eugene Meyer (pictured, right) takes control of the Fed. A financier and newspaper publisher, he’s decidedly the wrong man for the job. Resisting the advice of economists, he allows banks to fail in their thousands, taking the savings of ordinary people down with them. When his tenure ends in 1933, he buys The Washington Post, where he would prove to be a great deal more successful.
William McChesney Martin (pictured) begins a still-unmatched 19-year stint. Martin serves five presidents, developing policies to protect the almighty greenback from multiple threats including Vietnam War-induced inflation. Once described as ‘the happy Puritan’, Martin did not hesitate to tighten money when he saw fit. His most famous saying was: “We are the people who take away the punch bowl just when the party is getting good.”
The brief and turbulent term of William Miller (pictured) was the last time a president appointed a businessman to head the Fed. Former boss of industrial conglomerate Textron, Miller inherits fast-rising inflation – and allows it to go even higher on the much-criticised grounds that it’s not a problem. The dollar plummets in value and has to be rescued with the help of the IMF. Remembered mainly for trying to ban smoking at Fed meetings, he lasts less than two years.
President Jimmy Carter appoints the six foot seven inch Paul Volcker (pictured) to an embattled Fed. ‘Stagflation’ – a new term at the time – has bedevilled the US for most of the decade. ‘Tall Paul’ decides drastic measures are necessary and he lifts the federal funds rate to an unprecedented 20 percent. The prime inter-bank rate rockets to a sky-high 31.5 percent amid general fury, but Volcker stands firm. Within two hectic years, the economy returns to health.
Two months after taking office, Alan Greenspan (pictured) faces a baptism of fire in the form of the 1987 stock market crash. He goes on to guide the economy through the bursting of the equities bubble, a credit crunch, the massive Russian default and the aftermath of the attacks of September 11, 2001. America would enjoy the longest peacetime economic expansion in its history. Only the 2008 crisis, which happened after his watch, would hurt his reputation.
Handed a booming and prosperous America, Ben Bernanke (pictured) has a rude awakening with the onset of the 2008 financial crisis. Working on several fronts at once, he keeps the money flowing at the Fed’s discount window while printing money furiously under his quantitative easing programme. Although some critics fault him for not printing more money, he plays a major role in stabilising and restoring to health a distressed economy.
Janet Yellen (pictured) is sworn in as the first woman to head the Fed. Touted as a potential leader in the past, only to be denied when President Barack Obama decided to reinstate Bernanke in 2009, she ascends to the top job at a time when the US economy seems to be on much firmer ground, albeit with only hints of an overall recovery. Now Yellen has to figure out what to do with the $3trn in bonds in the Fed’s vaults and its legacy of quantitative easing.