In a conversation at the White House Correspondents' Association Dinner last month Bernanke responded to a CNBC anchor Maria Bartiromo’s question about whether the media and financial markets were right to think that he had signaled the Fed was done raising interest rates. He said "no" and Bartiromo reported such on her program. The market took an immediate fall.
Bernanke told the Senate Banking Committee in a hearing yesterday that his response to such a question, "was a lapse in judgment on my part." To his credit, Bernanke publically acknowledged his mistake and made a commitment to limit his comments going forward. From the Washington Post,
"In the future, my communications with the public and with the markets will be entirely through regular and formal channels."
While this was a minor miscue, it resulted in significant financial implications. However, Bernake came clean, learned from it and will be better for it. We all should hope that he will not over react and go silent. One of the Greenspan’s leadership traits was his ability to communicate to the markets and not over react to any one data point, dogma or political position. He found ways to decrease volatility.
We all make mistakes. The best leaders acknowledge the mistake, learn from it and clearly communicate a strategy to avoid such mistakes in the future. I think Bernanke proved he is capable leader through this experience.
Photo credit to Gerald Herbert - AP
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