Fed's Loss Is Bernanke's Gain

Ben Bernanke barely had time to put out the family photos on his new desk at the Federal Reserve chairman's office before his No. 2 announced his exit. Fed Vice-Chairman Roger W. Ferguson Jr., a Democrat who was the sole remaining Clinton appointee to the Federal Reserve, tendered his resignation on Feb. 22, giving President George W. Bush yet another seat to fill at the seven-member board. "This opens up an opportunity for Bush to put a further stamp on the Fed," says Gus Faucher, director of macroeconomics at Moody's Economy.com.

Bush isn't the only beneficiary of Ferguson's departure. Bernanke now also carries a stronger hand as he tries to carve his own path in the wake of his legendary predecessor, Alan Greenspan. Without Ferguson, Bernanke has a clearer shot at realizing one of his top objectives: imposing an explicit target rate for inflation, of perhaps 1% to 2%, at which the Fed's monetary policy should aim.