Bernanke faces harsh words at hedge fund conference by Stephen Gandel @FortuneMagazine May 7, 2015, 3:39 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Given what Ben Bernanke has been called by hedge fund managers in the past, you would have thought he would have come to SALT, the giant hedge fund conference in Las Vegas, with a very large body guard. He didn’t. Instead, the former head of the Federal Reserve came with a single, average-size, female assistant. He appeared to be unarmed. But you wouldn’t blame him for being nervous. Many a hedge fund manager has spent time at SALT and conferences like it since the financial crisis spewing vitriol at Bernanke and his policies. Two years ago, at a hedge fund conference in New York, two prominent hedge fund managers, Stanley Druckenmiller and Paul Singer, took turns bashing Bernanke. Druckmiller said Bernanke’s policies were totally outrageous and inappropriate. Singer said that Bernanke was creating class welfare. He later wrote in a letter to investors that the Fed would “ultimately destroy the value of money and savings while uprooting the basic stability of our society.” The Fed’s policies have lifted stock and bond markets, which should generally benefit most hedge fund managers and their investors. So, you would think that hedge fund managers would be Bernanke’s biggest fans, or at least happy with him. You would be wrong. One hedge fund manger at this year’s SALT conference explained it to me this way: It has to do with returns. The Fed’s boost of the stock market has made everyone’s portfolio, even someone just blindly invested in the S&P, go up by double digits. That makes it harder for hedge funds to tell their clients they need to pay hedge fund managers millions of dollars to manage their money. “When everyone is given the ability to dunk, hedge funds become less special,” he said. It’s easy to explain why Bernanke would agree to come to a conference like SALT at all: money. SALT is known as a lucrative speaking event. Former President George W. Bush is rumored to have been paid $250,000 to speak at the conference a few years ago. So, Bernanke was most likely rewarded handsomely for his appearance. Anthony Scaramucci, who heads SkyBridge Capital, the organization that puts on the SALT conference, says he has gotten some flack from other hedge funders for supporting Bernanke, but he said he didn’t receive any criticism this week. “History will bear out that Bernanke was one of the best policy makers and civil servants that we have ever had,” says Scaramucci. “U.S. was lucky to have him at just the right time.” On Wednesday evening at SALT, Bernanke sought to soften the potentially hostile crowd with a joke, and perhaps a jab at their intelligence. “If you were expecting Britney Spears, I am sorry to disappoint you, you are in the wrong place,” Bernanke said, according to sources who heard the speech, which was closed to the press. According to attendees who saw Bernanke speak, they said the former Fed chair did spend a fair amount of time defending his policies while head of the U.S. central bank, during which he used many measures to hold down interest rates and keep them low. He was also critical of some of his own actions. Bernanke said that early on during the financial crisis, he and others at the Fed were perhaps too optimistic about the severity of the damage that the housing bust and bad lending would inflict on financial markets and the economy. He said the economic recovery was on the right path, that there were no signs of deflation, and that the Fed would be able to exit the bond buying stimulus plan that he initiated, so-called quantitative easing, with no damage to the economy. Others have worried about what will happen when the Fed has to unload all of its bonds. Along with the speech, Bernanke attended a private dinner, hosted by Scaramucci, for conference attendees. Fortune has learned that hedge fund billionaire Leon Cooperman, General David Patraeus, and William Daley, the former White House chief of staff, attended the dinner, which was closed to the press. At the dinner, Daley, who is now an investment banker, and others pressed Bernanke about when he thought the Fed would start to sell off its bond portfolio. Some have argued that if the Fed were to hold onto its bonds, around $4 trillion worth, it would eventually lead to massive inflation. Bernanke said that was wrong. He said, relative to the U.S.’s nearly $17 trillion economy, the Fed’s bond portfolio is smaller than those of central banks in Japan and elsewhere. He said the Fed could hold onto its bonds for a long time without creating any sort of financial damage. Cooperman said there was no sign of hostility at the dinner. And that was true at the conference as well. In fact, Bernanke seemed to get a generally warm response from the crowd. “I think he did a great job during the financial crisis,” says Joshua Friedman, who manages the $25 billion hedge fund Canyon Partners and was also speaking at the conference. He did not use any of his time to bash Bernanke. The warmer than expected reception could be because Bernanke is essentially one of them now. He recently signed on as an economic advisor to Ken Griffin’s Citadel, a large Chicago-based hedge fund company. Even some of Bernanke’s critics seemed giddy at the prospect of meeting him at the conference. On Wednesday morning, investment strategist Peter Schiff of Euro Pacific Capital, who was on a panel about the economy, blamed the Fed for creating a fake recovery that has done little to help average Americans. He said even people with college degrees can only find work at McDonald’s and that the U.S. economy in worse shape than it was in 2008. Schiff laid the blame on the Fed, and on Bernanke’s policies. Yet, later in the day, when Schiff was told that Bernanke was nearby, he turned into a fanboy. “Where is he?” he said. “I’ve got to get a picture.” Schiff raced off with his iPhone in hand. Nonetheless, Bernanke did take some precautions. Unlike other high-profile speakers, he didn’t hang around the conference. After his speech, Bernanke strode purposefully down the ornately carpeted hallway of the Bellagio toward the casino and away from the conference. He didn’t appear to be ambushed by anyone, other than a reporter, this one, who jumped out from behind a tree and raced after him down the hall to ask him why he thinks hedge fund managers seem to compete to see who can say the worst things about him. “That’s their problem,” said Bernanke, with a laugh, waving off the reporter and continuing away, safely.