The fed handoff is done. Now what? In taking over from legendary Alan Greenspan, Ben Bernanke has his work cut out for him. CFOs are among those who aren't quite sure what to expect. Opinions are divided about whether Bernanke's talk about "inflation targeting" is a good thing or potential trouble.

• Author: Millman, Gregory J.
• Position: Federal Reserve Board

As the iconic Alan Greenspan was leaving the Federal Reserve chairmanship at the end of January, an unaccustomed spate of criticism appeared in the press, reminding one of the Reverend Dr. Parr's comment about posthumous attacks on the great writer Samuel Johnson: "Aye, now that the old lion is dead, every [fool] thinks he may kick at him." Yet

even the backhanded fare-thee-wells to Alan Greenspan had to grant that he held the Fed's helm longer than any other chairman except the colossal William McChesney Martin, whose tenure ran from 1951 to 1970.

Interestingly, Greenspan and Martin had something else, less noted, in common: both were succeeded by career academics, Greenspan by Benjamin Bernanke and Martin by Arthur Burns.

Ouch! Burns' watch featured the worst period of inflation in U.S. history, and he managed to astound the economics profession when his policies created the unprecedented phenomenon of simultaneous rises in inflation and unemployment--until then theoretically unthinkable. It took Paul Volcker, double-digit Fed funds rates and one of the worst downturns since the 1930s to clean up the mess Burns' tenure created.

So will history repeat itself? In fairness to the new Fed chair, both Bernanke skeptics and Bernanke champions seem to doubt it. "Another Burns? No, it's a whole different personality," says Laurence Meyer, former Fed governor and, like Bernanke, a champion of inflation targeting. Even the U.S. Chamber of Commerce's chief economist, Martin Regalia, who has some reservations about Bernanke, says, "Is it unfair to look back at Burns? It's neither fair nor unfair. It's a fact. But is it a fact that provides predictive information? I'm not sure that it does."

That said, anything is possible--and there's the rub. The Fed chair has enormous power and authority. History (see the sidebar) shows that the men at the helm of the Fed (so far, they've all been men) have taken it in wildly different directions. Bernanke is a relative newcomer to the Fed system. He was a Fed governor from 2002-05 and became chairman of the President's Council of Economic Advisors last June; prior to that, he was chairman of the Economics Department at Princeton University. One of the biggest challenges he will face is to make changes in the Fed chair a non-event, supporters suggest. If he has his way, his own handoff to a successor will be only a little more significant than a change in engineers on the Amtrak Metroliner.

In that scenario, the Fed train will run on time to a destination everyone knows, no matter who is at the controls. Everyone will understand what the Fed does and why, and no one will have to wonder about what the new chairman might really be thinking, or whether he has the guts to face down the White House if he has to.

But we're not there yet. "The first time we have a crisis and Bernanke does not act the way Greenspan did, and gets a lot of pressure, it will be interesting to see if he has the toughness to stick [it out]. The worst thing is to withdraw and not stick with one philosophy," says G. William Evans, CFO of LandAmerica Financial Group, a Richmond, Va.-based title insurance and real estate transaction services company. Blythe McGarvie, president of the Leadership for International Finance and member of the boards of Accenture, St. Paul Travelers Insurance, the Pepsi Bottling Group and Wawa Inc., also wonders, "How aggressive will new Fed chairman be about inflation? I think pretty aggressive, but we don't know, and that leads to some uncertainty."

What to Expect

To be sure, the decisions of a Fed chairman usually affect businesses only indirectly, and more or less over the long term--at least outside of such interest-rate-sensitive sectors as finance and housing--and it's safe to say that few executives have been losing sleep over Greenspan's departure.

Says John Bachmann, senior partner of Edward Jones and former chairman of the U.S. Chamber of Commerce: "I think the changes you'll see will be subtle. The traumatic change was when Volcker came in and changed the Fed's fundamental policy from managing interest rates to managing the money supply. It almost destroyed industries like autos and housing that depended on heavy doses of credit to sell the products. Now, look for a period of relatively low interest rates and low inflation--but a concern that inflation may be on the horizon."

Bachmann speaks for many. At Computer Sciences Corp., CFO Lee Level says, "Everyone I talk to is assuming business as usual from the Fed."

Others are less sanguine. The U.S. Chamber's Regalia says he thinks "this may be a bigger change...