Fed Chairman Bernanke Gives Speech At American Economic Association Meeting
Getty Images/Jessica Kourkounis

By Joshua Zumbrun and Alaa Shahine

Former Federal Reserve Chairman Ben S. Bernanke said Tuesday that the central bank should have explained more effectively that bailouts during the financial crisis would help people outside the finance industry.

"My natural inclinations, even if it weren't for the legal mandate, would be to try to help the average person," Bernanke said in his first public remarks since leaving the Fed in January, referring to the central bank's mandate from Congress to ensure full employment and stable prices. "The complexity though arises because in order to help the average person, you have to do things -- very distasteful things -- like try to prevent some large financial companies from collapsing."

Bernanke guided the economy through the financial crisis that brought down Lehman Brothers and the longest recession since the Great Depression -- events that he characterized in a speech in Abu Dhabi as "very, very dark hours." He responded with $3.3 trillion in emergency lending to financial institutions, including aiding the rescue of Bear Stearns and American International Group. "The natural reaction from the guy on Main Street is 'how come you're bailing them out and not bailing me out?' " Bernanke said. "By preventing the system from collapsing, we're protecting the economy, we're protecting you. But it's a complicated argument to make, and I don't think we always made it as well as we could have."

Target Interest Rate Pushed Down, Lots of Bonds Purchased to Stimulate Economy

Bernanke initiated an unprecedented stimulus campaign, lowering the Fed's target interest rate to zero in December of 2008 and introducing an era of bond buying known as quantitative easing. The jobless rate climbed as high as 10 percent in October 2009, and with the economy slow to heal, Bernanke initiated a second and third round of bond purchases, which have expanded the Fed's balance sheet to a record $4.16 trillion. "The result was there are still many people after the crisis who still feel that it was unfair that some companies got helped and small banks and small business and average families didn't get direct help," Bernanke said. "It's a hard perception to break."

In December, during his second-to-last meeting of the policy making Federal Open Market Committee, Bernanke began to wind down his stimulus campaign, slowing the pace of bond purchases to $75 billion a month from $85 billion, and charting a course of further "measured" reductions at each Fed meeting. In January, the committee cut the pace of purchases again, this time to $65 billion a month. U.S. household wealth has recovered from the crisis, Bernanke said. Janet Yellen, who served as Fed vice chair under Bernanke, became leader of the Fed in February. In testimony before Congress last month she said she expects "a great deal of continuity" as she takes over where Bernanke left off.

Bernanke's address marks his public debut after he concluded his eight years at the head of the central bank on Jan. 31. He will speak Wednesday in Johannesburg and March 7 in Houston, and he is working on a memoir. He said that it had been "very hard" for him to adjust to a world where, as Fed chief, his words were closely dissected. "It's one of the reasons I'm looking" forward to life as a former central banker, he said.

Economic Impact of 'Unseasonably Cold' Weather Is Being Studied

As Bernanke departed, the Fed faced the challenge of ascertaining how much of recent economic weakness is because of unusually harsh winter weather. Labor Department data showed weaker-than-forecast payroll growth for two consecutive months. Sales at U.S. retailers declined in January by the most since June 2012 and housing starts slumped by the most in almost three years, according to a Commerce Department report.

"Unseasonably cold weather has played some role," Yellen said in response to a question from the Senate Banking Committee on Feb. 27. "What we need to do, and will be doing in the weeks ahead, is to try to get a firmer handle on exactly how much of that set of soft data can be explained by weather and what portion, if any, is due to softer outlook," she said.

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8 Comments

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nlcraul

23 march 2014 manila, ph

economy in an intelligent view,

"bernanke wishes he'd done a better job explaining the financial crisis bailouts"
http://www.dailyfinance.com/2014/03/04/bernanke-financial-crisis-bailout-regrets/

with due respect to you sir dr. ben. with your heart and spirit this
is your statement, "to help the average person". we love you sir.
the only problem america the greatest country in the universe is
facing today is - "fed's balance sheet to a record $4.16 trillion".
what you've done is quite very very challenging. in all my letters
since i started writing my views, my comments which i named it
the great depression part 2 is very very clear. the u.s. economy is
the heart and soul of all the economies in this world. if anything
happens, be it negative or positive this is literally a wild fire. it will
spread around the globe. that's why, if the u.s. government fixed
the 2008 economic depression absolutely, even our small country
will be saved from doom. in my writings if the u.s. made it correctly
in fixing the economy, i am very very sure, america will received
praises in this universe. if not, so sorry it will be the other way
around. thanks'

facebook: thegreatdepression.part2@yahoo.com

please kindly take good care and God bless . . . . . . . raul

March 23 2014 at 2:46 AM Report abuse rate up rate down Reply
toosmart4u

And the republicans want to blame President Obama for the debt of this great country of ours. Between bush jr. and ben bernanke is where most of our national debt came from. Now remember people bush jr. took over a surplus of tax dollars and turned it into trillions of debt. Democrats wanted to shore up social security and pay on the national debt, but we got tax breaks for the large corporations and the rich.

March 05 2014 at 6:55 AM Report abuse +1 rate up rate down Reply
dquandle

He deeply regrets not beng able to suck even more from the American people to bail out his corporate-parasite owners. Both he and Obama were hoping that Obama would be able to give him and his buddies social security to play with… alas. Deep deep regrets.

March 05 2014 at 5:34 AM Report abuse rate up rate down Reply
socalflash

Bernanke simply protected his buddies. The bailout could have been done with detailed, iron-clad restrictions to prevent banksters from profiting from the mess they created.

March 05 2014 at 12:24 AM Report abuse +2 rate up rate down Reply
Jim

Everytime this idiot opened his mouth the markets tanked. Do us all a favor Ben and go hide under a rock!

March 04 2014 at 10:46 PM Report abuse rate up rate down Reply
beaucphs

Let's call it like it is: aiding and abetting the real terrorist, those who can destroy a nation's economy and be rewarded for their actions.

March 04 2014 at 10:35 PM Report abuse rate up rate down Reply
gkurran

It isn't the weather, it's Obama that's slowing the recovery.

March 04 2014 at 10:27 PM Report abuse rate up rate down Reply
betty_brock

The "average people" he said he was helping were hurt beyond repair by the printing of trillions of unbacked dollars.

March 04 2014 at 8:08 PM Report abuse +2 rate up rate down Reply
thefacts22

Mr Ben,what are you trying to do now? Everybody knows all that fake digital money is in the pockets of thiefs,and did not help much at all

March 04 2014 at 6:48 PM Report abuse +4 rate up rate down Reply
1 reply to thefacts22's comment
CherMoeLin

Funny how they are all "sorry" after the fact. Once they retire from the jobs where they committed wrong doing on BEHALF of the rich. Just like Supreme Court Justices " are sorry" for horrendous decisions they made. Everyone is sorry. One was sorry for voting to install Bush as President. Years later and unimaginable damage later, they are sorry.

March 04 2014 at 10:28 PM Report abuse -1 rate up rate down Reply
Sonny

Ha...........just more pathetic lies from the slime!

March 04 2014 at 6:46 PM Report abuse +1 rate up rate down Reply