Bernanke: Economic Growth Is A Shared Responsibility

By Andrea Salazar

Federal Reserve Chairman Ben Bernanke pointed out Tuesday that fiscal policy is not the only tool needed to fix the nation’s economic problems.

“Fostering healthy economic growth and job creation is a shared responsibility of all economic policymakers, in close cooperation with the private sector,” Bernanke said. “Fiscal policy is of critical importance…but a wide range of other policies - pertaining to labor, markets, housing, trade, taxation and regulation, for example - also have important roles to play.”

Bernanke told members of the Joint Economic Committee that “the recovery is close to faltering.”

Although the chairman would not comment on how, specifically, Congress should act, he did offer some advice.

“As you think about reducing our deficits and putting us on a sustainable path, it’s also important to think about how good is our tax system? How efficient, how effective is it? How equitable is it? How effective is our government spending? Is it producing the results we want. Is it supporting growth and recovery?”

Bernanke said that the financial crises in Europe, the housing market, the job market and consumer behavior are all factors that are hindering domestic growth.

“Consumer behavior has both reflected and contributed to the slow pace of recovery,” Bernanke said. “Households have been very cautious in their spending decisions, as declines in house prices and in the values of financial assets have reduced household wealth, and many families continue to struggle with high debt burdens or reduced access to credit.  

Bernanke’s complete testimony is available on the Federal Reserve website.

Financial Chiefs Say Cooperation Key To Implementing Wall Street Reform

The heads of nearly every major federal regulatory agency told members of the Senate Banking Committee on Thursday that they are working together to slowly craft new rules that will govern the way the nation’s private financial sector operates.

Federal Reserve (Fed) Chairman Ben Bernanke said cooperation between agencies is crucial to successfully implementing provisions within the Wall Street reform bill that was passed earlier this year.

“It is essential that the (law) be carried out expeditiously and effectively,” Bernanke said. “Coordination’s going to be extremely important.”

Bernanke was joined on Capitol Hill by SEC Chairwoman Mary Schapiro, FDIC Chairwoman Sheila Bair and Deputy Treasury Secretary Neil Wolin. As part of the new law, the group will meet weekly with Treasury Secretary Tim Geithner to examine the stability of the financial sector.

Over the course of the next few weeks, the agency heads will collaborate on writing new rules that will dictate the behavior of big financial companies nationwide. Specifically, one of their duties will be to identify and monitor so-called “too big to fail” firms.

Fed Caused Lehman Bankruptcy, Says Former CEO

Ex-Lehman Brothers Chief Excutive Richard Fuld told members of the Financial Crisis Inquiry Commission on Wednesday that the Federal Reserve (Fed) helped create the domino effect that put the 2008 Wall Street collapse in motion.

In a hearing on Capitol Hill, Fuld denied speculation that bad judgment on his part led Lehman to fail. Instead, Fuld said in prepared remarks that “Lehman was forced into bankruptcy not because it neglected to act responsibly or seek solutions to the crisis, but because of a decision, based on flawed information, not to provide Lehman with the support given to each of its competitors and other non-financial firms in the ensuing days.”

Fuld pointed to rumors in 2008 that Lehman did not possess the necessary capital to back its investments as one of the reasons it went bankrupt. Additionally, Fuld lamented the fact that the federal government chose not to deem his former company as being ‘too big to fail.’

“Had Lehman been granted that same access as its competitors…Lehman would have had time for at least an orderly wind down or for an acquisition which would have alleviated the crisis that ensued,” said Fuld.

Today’s hearing is one of a series that have been held by the commission as it prepares to release a report on the 2008 financial collapse to the President and Congress by mid-December. The commission will hear from both Fed Chairman Ben Bernanke as well as Federal Deposit Insurance Corporation (FDIC) Chair Sheila Bair tomorrow.

Bernanke: Unemployment Stunting Economic Growth

By Brandon Kosters - Talk Radio News Service

Fed Chairman Ben Bernanke delivered his Semi-annual Monetary Policy Report to Congress today. Bernanke predicted an unemployment rate between 7-7.5 % by the end of 2012, and a GDP increase of 3-3.5% by the end of this year, with marginal increases over the course of the next two years.

He said that inflation is currently less than 1%, and does not expect it to increase signifigantly over the course of the next two years.

Bernanke expressed concern over the nation’s current high unemployment rate of 9.5%, and the degree to which it has limited household spending.

Bernanke added that in addition to its immediate adverse effects, short-term unemployment can easily lead to long-term unemployment, as workers’ skills “erode,” and certain skill-sets become economically obsolete.

Bernanke: Financial Reform Should Prevent Further Crises

By Brandon Kosters - Talk Radio News Service

Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System, believes that the Wall Street Reform bill signed by President Obama this morning will serve the public by giving regulators more power to respond to firms in danger of collapsing.  Bernanke said that the bill, coupled with other regulatory standards for the bank capital, will “place our financial system on a sounder foundation and minimize the risk of a repitition of the devastating effects of the past three years.”