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Post by bot on Nov 8, 2013 18:46:55 GMT -5
Bernanke: Must make crises less likely, costly
WASHINGTON (MarketWatch) - It will be a continuing challenge for federal regulators to make financial crises "far less likely" and "far less costly" if they happen, said Federal Reserve Chairman Ben Bernanke on Friday. In remarks prepared for a panel discussion about the 2008 financial crisis at the International Monetary Fund, Bernanke said every financial crisis has common elements. "The challenge for policymakers is to identify and isolate the common factors of crises, thereby allowing us to prevent crises when possible and to respond effectively when not," he said. He compared the 2008 crisis with the 1907 financial panic that led to the creation of the Fed. He said both crises had a trigger that spread uncertainty, fire sales when investors panicked, followed by liquidity provision from the private or public sector followed by the slow restoration of confidence. "The economic consequences [of the 2008 crisis] are still with us," Bernanke said. Both crises were able to fester unseen in poorly regulated "shadow banking" sectors of the U.S. financial system, he noted.
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