Bernanke Discusses His Worst Day at The Fed

During an interview with The FOX Business Network’s Maria Bartiromo, Former Federal Reserve Chairman Ben Bernanke shared his personal experience regarding the 2008 financial crisis and his new book "The Courage To Act".

“I wanted to give my own personal viewpoint on what happened. And it was a chance for me to go back and look through my e-mails and records and think about what actually happened and try to understand it myself.  And I thought it was important to give the perspective of the Fed, which was in the center of all the activities, and there hasn't been anything written by the Fed. And we cover not just the crisis, but also the period since then which has been quite interesting, with monetary policy and quantitative easing and the European crisis, all those things we talk about,” he said. 

He described the hardest day as Federal Reserve Chairman.

“The toughest was clearly September 2008, the Lehman weekend, followed by what I think of as Lehman week with AIG, Merrill Lynch being taken over, Goldman Sachs and Morgan Stanley under pressure. And we had to go -- I remember taking Secretary Paulson, we went to talk to Congress about AIG and we explained to them what we were going to do. And basically we're told, well, Congress is not supporting this, this is your choice, this is your decision, your responsibility, and it was very, very tough,” he said.

Bernanke argued that the Dodd-Frank and the Basel III changes were positive for the banking system.

“A lot of progress has been made… I think the [financial] system is a lot stronger now and I would point specifically to capital. Banks have a lot more capital. They have to be stress tested. Big banks have to hold more capital than other banks. They have to hold loss absorbing capacity in terms of bonds that can be converted to capital. So there is a lot more buffer now and that’s really good,” he said.

Bernanke argued requiring the banks to hold more capital has helped the U.S. stay competitive

“[The] U.S. banking system right now is very competitive in the world and moving into areas where other banking systems are… too weak enough to compete. So I think overall our system is doing quite well.”

He also discussed the state of the U.S. economy.

“I think it's improving. It's moving forward at a moderate pace. It’d be nice if it were stronger, but we've sure come a long way. I mean, in 2009 the unemployment rate was 10%; today it's 5.  We've had, you know, six years of growth. Again, a stronger economy would be better, but we have certainly made a lot of progress and we’re doing well compared to other industrial countries,” he said.