WASHINGTON — U. S. Federal Reserve Chairman Ben Bernanke steps down Friday after guiding the world’s largest economy through years of tumult. Bernanke wins praise for crisis management and some criticism for unfinished reforms.
Bernanke says managing the economic crisis in 2008 was like driving a car that narrowly avoids a terrible crash.
“It is my nature, I think, to kind of focus on the problem," he said. "You know, and I was so absorbed in what was happening and trying to find response to it that I wasn't really in that kind of reflective mode. I mean, later on, you know, I was kind of like, you know, if you're in a car wreck or something, you are mostly involved in trying to avoid going off the bridge; and then later on you say, 'Oh, my God, you know.”
Bernanke and colleagues took unprecedented actions to slash interest rates. Lower rates were intended to pull the economy out of a dive by making it easier for businesses and families to borrow the money they needed to make major purchases.
The economy stopped shrinking and began growing.
Wall Street veteran and Adelphi University professor Michael Driscoll says Bernanke had to be courageous and creative to tackle new problems.
"The things Bernanke had to face ... were so large, so big, and really I do not think it is an understatement to say ... the future economic well being of the United States and the globe were hanging in the balance,” he said.
Critics say Bernanke failed to recognize that the U. S. housing market was growing in unsustainable ways. Severe problems in the housing market played a key role in the financial crisis.
Others say the Fed should have rescued Lehman Brothers, the failing financial firm that collapsed and shook markets.
And Boston University professor and former Federal Reserve official Cornelius Hurley says reforms intended to make the financial system less vulnerable to the collapse of any huge financial firm are inadequate and incomplete.
“That reform agenda does not even come close to addressing the too big to fail problem ... perpetuating the systemic risk that is in the six largest banks in our country," he said.
Bernanke, a former Princeton University professor, says his intense study of the history of the Great Depression helped him navigate this crisis. He says it will help critics and others understand his actions.
“We hope that as the economy improves and as we tell our story and as more information comes out about, you know, why we did what we did and so on, you know, that people will appreciate and understand that what we did was necessary, that it was in the interest of the broader public," he said. "It was a Main Street set of actions aimed at helping the average American. “
That understanding may be helped by Bernanke’s drive to make the Federal Reserve’s actions easier to understand.
During his tenure he used clearer language to describe the Fed’s actions and goals, and started holding regular news conferences in the hope that better-informed investors could make better decisions with more information and less panic.