David Einhorn: Bernanke answers 'frightening' during dinner chat

David Einhorn, manager of the $10 billion Greenlight Capital Inc., said he found a recent dinner conversation with former Federal Reserve chairman Ben S. Bernanke scary.
MAY 09, 2014
David Einhorn, manager of Greenlight Capital Inc., said he found a recent dinner conversation with former Federal Reserve chairman Ben S. Bernanke scary. “I got to ask him all these questions that had been on my mind for a long time,” Mr. Einhorn said in an interview referring to a March 26 dinner with Mr. Bernanke. “It was sort of frightening because the answers were not better than I thought they would be.” Mr. Einhorn, 45, has been critical of Mr. Bernanke's willingness to leave interest rates near zero for more than five years. The hedge fund manager, whose firm oversees $10 billion, has said the benefits of low rates diminish over time until they are more harmful than helpful, and that the Fed's stimulus has led to income inequality. Mr. Bernanke, a former Princeton University economics professor, stepped down this year after eight years helming the U.S. central bank. In describing the dinner conversation at New York's Le Bernardin, Mr. Einhorn criticized Mr. Bernanke for saying he was 100% certain there would be no hyperinflation and that it generally occurs after a war. “Not that I think there will be hyperinflation, but how do you get to 100% certainty about anything?” Mr. Einhorn said. “Why can't you be 99% certain?” Mr. Bernanke responded, “You are wrong” to a question about the diminishing returns of having interest rates at zero, according to the hedge fund manager. The ex-Fed chief's explanation, Mr. Einhorn said, was that raising interest rates to benefit savers wouldn't be the right move for the economy because it would require borrowers to pay more for capital. A message left for Mr. Bernanke at the Brookings Institution wasn't immediately returned. Mr. Einhorn said he was keeping an “open mind” about the new Fed Chairman Janet Yellen. “I would love to see if she had a better reason for rates to remain at zero at this stage of the economy,” he said. (Bloomberg News)

Latest News

CFP Board names head technology officer
CFP Board names head technology officer

The seasoned IT leader arrives as the credentialing body for CFP professionals considers AI's implications for the future of financial planning.

FINRA and advisors' other work
FINRA and advisors' other work

The brokerage industry regulator once again takes a stab at updating rules for independent brokers with other businesses and jobs

Minority capital comes with caution
Minority capital comes with caution

Transactions have slowed according to recent data as industry insider warns that the trip doesn't always match the brochure when minority investors come onboard.

SEC chair says hedge funds may have to submit less data
SEC chair says hedge funds may have to submit less data

Paul Atkins wants agency staff to narrow the scope of filing requirements.

Retirees may need to be less cautious with investments, says Concurrent retirement expert
Retirees may need to be less cautious with investments, says Concurrent retirement expert

With balances in 401(k) accounts slipping, it's even more important to maximize funds.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave