US Fed chief Bernanke puts his trust in Canadian bonds

Economics Editor,Sean O'Grady
Wednesday 23 July 2008 00:00
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Never regarded as the raciest of figures, the chairman of the United States Federal Reserve, Ben Bernanke, has revealed an especially dull personal approach to investment, with Canadian Treasury bonds forming a key element in his portfolio.

As required by law, the Fed has issued Mr Bernanke's annual financial disclosure report, which shows that the central banker and his family owned financial assets of between $1.2m (£600,000) and $2.5m in 2007.

Federal rules require only that Mr Bernanke and other central bank officials report the order of magnitude of their holdings, not an exact total. That leaves the Bernankes much better off than most Americans, but makes them look impoverished besides the bankers and financiers Mr Bernanke is paid to oversee and, occasionally, rescue. Indeed the entire Bernanke family fortune would be considered a fairly mean bonus by some on Wall Street.

Mr Bernanke, a former Princeton University professor, reported that his two largest assets were conservatively managed annuities: TIAA Traditional and the CREF Stock Large Cap Blend. Each was worth between $500,001 and $1m, and are moderately more risky than the Canadian government securities.

Mr Bernanke enjoys a yield of between $141,500 and $333,100 from his investments. The economics textbooks he wrote as an academic bring in a further $50,000 to $100,000 in royalties. His salary at the Federal Reserve is also a matter of public record – $186,000 in 2007, rising to $191,300. He did not have any gifts or travel expenses to report. So far, at least, Mr Bernanke ranks behind his predecessor in the wealth stakes.

Alan Greenspan, 82, and able now to make good money on the lecture circuit and from his memoirs, listed total assets of $4.1m to $8.9m in his last year in office in 2005. The chairman and other Fed board members are not allowed to own stock in banking organisations or shares of mutual funds specialising in banking and finance.

There is no public disclosure requirement for officials at the Bank of England, nor is there an absolute ban on owning any shares. The Bank does, however, state that, "by virtue of their positions, members of the Monetary Policy Committee are in a situation where it is highly undesirable that they should be actively involved in managing an investment portfolio" and requires disclosure of trading activity. As the Governor, Mervyn King, and his two deputies are members of the MPC, such strictures apply equally to them, but their personal financial affairs are not subject to the same public gaze as Mr Bernanke's. At least for now.

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