Bernanke advocated for
Wall Street's bailout in 2008 during the financial crisis when he led the
Federal Reserve.
He still thinks the
bailout was the right call, but looking back he wishes more corrupt Wall Street
bankers who helped bring on the crisis went to jail.
"You can't put a
financial firm in jail," Bernanke told USA Today in an interview Sunday.
"Everything that went wrong or was illegal was done by some individual,
not by an abstract firm...there should have been more accountability at the
individual level."
Bernanke left the Fed
more than a year ago and his memoir, The Courage to Act, comes out this week.
It is supposed to detail life inside the Fed during the worst crisis since the
Great Depression.
Bernanke and the Fed
drew lots of criticism from the media and general public for bailing out Wall
Street at a time of great income inequality, rising unemployment and a
collapsed housing market.
On Sunday, Bernanke
defended his bail out decision. He also said he wished Lehman Brothers, which
collapsed into bankruptcy and was portrayed as a poster child of Wall Street
corruption, could have been saved.
"If we hadn't
prevented the collapse of Wall Street, then Main Street would've collapsed as
well," Bernanke said.
On Lehman: "We
were very very determined not to let it collapse," Bernanke said.
"Unfortunately, the potential buyers for Lehman, Bank of America and
Barclays, decided against buying the company because it had so much red ink on
the balance sheet."
Bernanke did admit one
mistake during his tenure as Fed chair: not explaining the Fed's actions to
ordinary Americans.
He says that the public
outcry over the Fed's decision to bail out Wall Street stems from a
misunderstanding and that the Fed did not do a good job clarifying its actions.
"We were so
focused on trying to fix the problems, stabilize the system," Bernanke
said. "We didn't have the time or the energy to really explain to the
public to the extent that we should have perhaps exactly what we were doing,
why were doing it, why it was essential for the health of the economy."
"Even today,
there's still a lot of people who, I think, misunderstand what we did and why
we did it..there's still hostility towards the Federal Reserve,
politically."
Coincidentally,
Bernanke's book comes at a very important time for the Fed. Its committee, led
by Bernanke's hand-picked successor, Janet Yellen, could raise interest rates
for the first time in almost a decade. In the interview, Bernanke didn't
comment much on the Fed's looming rate hike decision.
Bernanke put the Fed's
key interest rate at zero in December 2008 to reboot the U.S. economy and
housing market. Being at "zero bound" is considered an emergency
level and some argue the U.S. economy is no longer in a crisis, nor should
interest rates.
Bernanke also started a
massive bond-buying program to stimulate the economy called quantitative
easing, or QE.
The stimulus plan --
which ended last October -- sparked a 6-year bull market in American stocks and
the U.S. economy has gradually improved. The unemployment rate peaked at 10% in
2009 and today it is 5.1%.
However, many Americans
haven't benefited much from the economic recovery because of stagnant wage
growth. The Fed and Bernanke have been criticized by some for exacerbating
income inequality, one of America's biggest economic issues. The basic idea is
that the Fed helped Wall Street bankers get richer while everyone else had to
suffer through tough times.
Bernanke, who grew up
in rural South Carolina, rejects any notion that he wanted to bail out Wall
Street. He argues he had to do it to prevent an even worse economic downturn.
"I certainly was
not eager to bail out Wall Street," Bernanke said. "We knew that if
the financial system collapsed, the economy would immediately follow."
CNNMoney (New York)
October 4, 2015: 10:44 PM ET
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