Comments and Quotes

Federal Reserve Chairman Ben Bernanke

 

BernankeFedSeal

 

Date

Quote

September 2000

A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street. But what effect would it have on the broader U.S. economy? If Wall Street crashes, does Main Street follow? Not necessarily.  

ForeignPolicy.com

November 21st, 2002

Over the years, the U.S. economy has shown a remarkable ability to absorb shocks of all kinds, to recover, and to continue to grow. Flexible and efficient markets for labor and capital, an entrepreneurial tradition, and a general willingness to tolerate and even embrace technological and economic change all contribute to this resiliency.  

National Economists Club, Washington, D.C.

The Federal Reserve

November 15th, 2005

“U.S. financial markets would likely be able to absorb a significant shift in foreign official demands for U.S. debt, including by China.”  

Moreover, the agencies have made clear that no bank is too big too fail, so that bank management, shareholders, and uninsured debt holders understand that they will not escape the consequences of excessive risk-taking. In short, although vigilance is necessary, I believe the systemic risk inherent in the banking system is well managed and well controlled.  

Response to written questions received from Senator Jim Bunning in connection with the hearing before the Committee on Banking, Housing, and Urban Affairs on November 15, 2005

The Wall Street Journal

March 28th, 2007

"At this juncture, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained."

The Economic Outlook:  Joint Economic Committee, U.S. Congress:

The Federal Reserve

April 3rd, 2008

"Given the exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain.”

CBS News

July 19th, 2007

“Promoting access to credit and to homeownership are important objectives, and responsible subprime mortgage lending can help advance both goals.  In designing regulations, policymakers should seek to preserve those benefits.”

“However, with long-term inflation expectations contained, futures prices suggesting that investors expect energy and other commodity prices to flatten out […]” 

“The unemployment rate is anticipated to edge up to between 4-1/2 and 4-3/4 percent over the balance of this year and about 4-3/4 percent in 2008, a trajectory about the same as the one expected in February.”   

“The central tendency of the growth forecasts, which are conditioned on the assumption of appropriate monetary policy, is for real GDP to expand roughly 2-1/4 to 2-1/2 percent this year and 2-1/2 to 2-3/4 percent in 2008.”

Semiannual Monetary Policy Report to the Congress

The Federal Reserve

September 20th, 2007

“The Federal Reserve takes responsible lending and consumer protection very seriously.  Along with other federal and state agencies, we are responding to the subprime problems on a number of fronts.  We are committed to preventing problems from recurring, while still preserving responsible subprime lending.”

“The risk of moral hazard must be considered in designing government-backed programs; such programs should not bail out failed investors, as doing so would only encourage excessive risk-taking.”  

“However, in my view, the reason that GSE securitizations are well-accepted in the secondary market is because they come with GSE-provided guarantees of financial performance, which market participants appear to treat as backed by the full faith and credit of the U.S. government, even though this federal guarantee does not exist.”

Subprime mortgage lending and mitigating foreclosures:  Committee on Financial Services, U.S. House of Representatives

The Federal Reserve

October 15th, 2007

It does seem that, together with our earlier actions to enhance liquidity, the September policy action has served to reduce some of the pressure in financial markets, although considerable strains remain. From the perspective of the near-term economic outlook, the improved functioning of financial markets is a positive development in that it increases the likelihood of achieving moderate growth with price stability.

However, in such situations, one must also take seriously the possibility that policy actions that have the effect of reducing stress in financial markets may also promote excessive risk-taking and thus increase the probability of future crises.

"It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions."

Speech at the Economic Club of New York

The Federal Reserve

May 17th, 2007

The subprime mess is grave but largely contained.  While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.

Forbes

October 15th, 2007

"I'd like to know what those damn things are worth. Until investors are confident in their evaluations, they are not going to be willing to fund these vehicles."

Regarding complex mortgage securities that are inscrutable to many investors

NY Times

January 17th, 2008

“To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next twelve months or so.”  

“As I have discussed on other occasions, the nation faces daunting long-run budget challenges associated with an aging population, rising health-care costs, and other factors.  A fiscal program that increased the structural budget deficit would only make confronting those challenges more difficult. ” 

The Economic Outlook:  Committee on the Budget, U.S. House of Representatives 

The Federal Reserve

February 29th, 2008

"I expect there will be some failures.  I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system."

The Guardian

June 9th, 2008

Despite a recent spike in the nation's unemployment rate, the danger that the economy has fallen into a "substantial downturn" appears to have waned,

MSNBC

July 16th, 2008

The recent expansion of the subprime market was clearly accompanied by deterioration in underwriting standards and in some cases, by abusive lending practices and outright fraud…”

“Thus, declines in residential construction will likely continue to weigh on economic growth over coming quarters, although the magnitude of the drag on growth should diminish over time…”

Semiannual Monetary Policy Report to the Congress:  Before the Committee on Financial Services, U.S. House of Representatives

The Federal Reserve

July 16th, 2008

“… no danger of failing.”

“adequately capitalized”

In reference to Freddie Mac and Fannie Mae

CBS

August 23rd, 2008

If no countervailing actions are taken, what would be perceived as an implicit expansion of the safety net could exacerbate the problem of `too big to fail,' possibly resulting in excessive risk-taking and yet greater systemic risk in the future.”

In Regards to the bailout of Freddie Mac and Fannie Mae

MSN

September 19th, 2008

Bernanke called the current problems the "most severe financial crisis" in the post-World War II era. Investment banks are seeing "tremendous runs on their cash," Bernanke said. "Without action, they will fail soon.” 

Politico

 

 

 

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