News Column

A Time Test for Leadership

April 2006, Hispanic Business Magazine

Jesús Chavarría, Editor & Publisher

Great leaders have impact, and the greatness of their leadership is measured by their impact over time. No one illustrates that better than Gloria Molina, winner of the 2006 Hispanic Business magazine Woman of the Year award. For two decades, she has promoted Hispanic political participation by example and advocacy. She fully deserves the celebration that awaits her at the WOY Gala in Las Vegas on May 4 (for details, visit

Ms. Molina is one of 20 Elite Hispanic Women whom we honor in this issue, including the five WOY finalists and 14 other leaders who, collectively, demonstrate the highest levels of achievement in a cross-section of the professions.

Like Ms. Molina, retired Federal Reserve Chairman Alan Greenspan is another great example of time-tested leadership. Until February 1, when Ben Bernanke took over, Mr. Greenspan had guided the Fed since 1987. According to economist Mark Skousen, monetary policy changed seven times in Mr. Greenspan's tenure, alternating between "easy money" lower rates and "tight money" higher rates. Despite fluctuating circumstances, a record of solid economic growth attests to his leadership.

But the future belongs to Mr. Bernanke, who now faces his own time test. Like clockwork, the Federal Reserve Bank has raised interest rates 14 times since 2004. This tightening cycle has raised rates from a historically low 1 percent to a historically low 4.5 percent. With the clock ticking, the capital markets are watching Mr. Bernanke to test his likely approach to monetary management for the next14 years, the regular termfor a Fed chairman.

A rate of 4.5 percent represents a safe point, given mixed signals from economic data and the consensus opinion that U.S. growth will slow in 2006. The big question is whether Mr. Bernanke will take a more pro-growth stance, rather than following Mr. Greenspan's priority of keeping inflation low. However, conventional wisdom holds that monetary policy can restrain an exuberant economy, but can't stimulate a stagnant one. As economists say, "you can pull a string but you can't push it."

In addition to interest rates, the Fed has other mechanisms that affect businesses, such as the Community Reinvestment Act (CRA). While Mr. Greenspan recently won a Golden Eagle award from the Florida Minority Community Reinvestment Coalition for his implementation of CRA, both he and Mr. Bernanke have expressed concerns about a lack of hard data to encourage political support for the law.

But minority communities in general – and the Hispanic economy in particular – could prove an ally during Mr. Bernanke's first year. Research firm Yankelovich calls the Hispanic market "a main driving force in the American economy" for 2006.

The Fed chairman may find you can't push on a string, but you don't need to. If it's tied to the U.S. Hispanic economy, the string will pull him toward the future.


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