Sunday, January 26, 2014

The Joseph Goebbels of the Federal Reserve is a Woman

WaPo's Zachary A. Goldfarb has a profile out on Michelle Smith.


Before she helped Ben S. Bernanke transform the Federal Reserve, before she was a top aide to Alan Greenspan, before she was a confidante to Timothy Geithner and a senior adviser to Lawrence Summers[...]

Smith, 44, who is the Fed’s chief of staff and runs its office of public affairs, was instrumental in pushing the naturally reserved Fed chairman, Bernanke, and the famously secretive central bank to become more open and to engage the media as never before. The goal was to convince the country — largely through the reassuring words of the soft-spoken Bernanke, a son of Dillon, S.C. — that the Fed was out to help the average American worker.

“She fought an uphill battle, which she ultimately won, that the Fed needs to let the public in,” said Kevin Warsh, a former Fed governor.

Most accounts of the economic ups and downs of the past 20 years have focused on the leading men. Smith’s story is about what it’s like for a woman to operate out of the public eye but in the upper echelons of American government while striving to balance work and family life. It’s a story that will reach another turning point Feb. 1, when Bernanke steps down and Janet L. Yellen, the Fed’s vice chairman, ascends to the central bank’s top job.

Smith “is one of the most powerful women no one has ever heard of,” said Jake Siewert, head of communications for Goldman Sachs and a former official in the Clinton and Obama administrations.
Smith traveled the world with Summers and his chief of staff, Sheryl Sandberg, who would go on to become the No. 2 at Facebook, author of the book “Lean In” and one of the most influential female executives of the country. But in those days, Sandberg looked to Smith for inspiration about raising a family in the intense world of high finance and politics.

“Michelle was my first friend and peer who I was working with who had a child,” Sandberg said, recalling the birth of Smith and husband Blake’s daughter in 1997. “Michelle took maternity leave and came back. She laid down that example for me and others.”
When Greenspan prepared to step down in 2006, he asked Smith to go with him to start a consulting firm. She reluctantly agreed and told the new chairman, Bernanke, that she would go. The Fed announced her resignation on a Friday.

The new boss

Over that weekend in 2006, Smith was in tears, regretting the decision. She finally told Greenspan. “I hoped very much she’d become a partner of mine in the business, and despite the potential large rewards, she decided the Fed needed her more than I did,” Greenspan said.
She made it her job to personalize the Fed by making Bernanke the face of the government’s response.
“When I showed up in ’09, she was really at the center of everything. She wasn’t just the person people called to find out what her boss thinks. She is the person who you call to get something done or advice,” said Siewert, the Goldman Sachs executive, who at the time was working with Geithner. “There was a need and demand for a coordinated reaction, coordination between the White House and Treasury and the Fed. Michelle was the natural centerpoint for that.”

More than anything, her job was to protect the Fed’s reputation.

With a new chairman and two decades of financial policymaking behind her, many expected Smith, the mother of a high school student, Madeleine, and a middle-schooler, Henry, to decamp from the Fed once and for all. She has had opportunities.

“Over my years in the private sector, I’ve tried to recruit her to join me,” Facebook’s Sandberg said. “She’s never done it. She remains a public servant.”

Smith plans to continue in her current role. She grew closer to Yellen during preparations for the nomination process and the leadership shuffle at the Fed.

Yellen appears to be picking up where Bernanke left off and not where he started — not intending, as he once did, to reduce the Fed chairman’s profile. On the contrary, she has talked with Smith about speeches and venues that could help build up her profile beginning in April.

“I do think people will be focused on who I am, what my values are. And I’m going to want to communicate the message that we’re devoted to improving the lives of households in the United States and doing things that benefit Main Street,” Yellen said in an interview.

The full profile is here.


  1. Her skills are on display in this interesting article

    1. RE: "Her skills".
      One of the guys over at TheHousingBubbleBlog is asking, "WHAT ARE THE CHANCES THE FED WILL BAIL OUT COMMUNIST CHINA’S BANKING SYSTEM?"

      I wonder. You?

      - PanarchistamericanHelot