Fed Chairman Bernanke Says Low Rates Back Then Were “Appropriate”
What do you think?
Some experts point to Barney Frank as the cause of the subprime mortgage which turned into a full fledged housing crisis which has played a massive role in exploding the U.S. economy while other experts point to house flippers yet others point to the Fed for their holding rates down, putting the economy at risk.
Regardless of where you stand, hindsight is 20/20, right? Today, Ben Bernanke spoke to the American Economic Association and noted that at the time, the low interest rates were “appropriate” and defends what steps they took at the time (which implies that the Fed’s hands are clean when it comes to the crash).
Bernanke’s closing is telling in that he notes that caution and flexibility are key:
“That said, having experienced the damage that asset price bubbles can cause, we must be especially vigilant in ensuring that the recent experiences are not repeated. All efforts should be made to strengthen our regulatory system to prevent a recurrence of the crisis, and to cushion the effects if another crisis occurs. However, if adequate reforms are not made, or if they are made but prove insufficient to prevent dangerous buildups of financial risks, we must remain open to using monetary policy as a supplementary tool for addressing those risks–proceeding cautiously and always keeping in mind the inherent difficulties of that approach. Clearly, we still have much to learn about how best to make monetary policy and to meet threats to financial stability in this new era. Maintaining flexibility and an open mind will be essential for successful policy making as we feel our way forward.”
Are you buying it? Did the Fed play a role or are their hands clean and the blame is to be placed elsewhere? 2010 will be the year of the “you caused the economic crash” blame game, this should be interesting to watch.
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This article published on Monday, January 4th, 2010 at 12:38 am | Contact the editor
Topics: News
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AGBeat Editor-in-Chief: Lani, named one of Real Estate’s 100 Most Influential, as well as 12 Most Influential Women in Real Estate, is a business writer hailing from the great state of Texas in the city of Austin. As a digital native, Lani is immersed not only in advanced technologies and new media, but is also a stats nerd often burried in piles of reports. Lani is a proven leader, thoughtful speaker, and vested partner at AGBeat.
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- RealEstate Babble:
AgentGenius: Fed Chairman Bernanke Says Low Rates Back Then Were “Appropriate” http://bit.ly/6Yrnbf Full http://bit.ly/8LCWrE
- Real Estate Ninja:
Fed Chairman Bernanke Says Low Rates Back Then Were “Appropriate” http://bit.ly/6XvJVe
#RealEstate - kristin terry:
Fed Chairman Bernanke Says Low Rates Back Then Were “Appropriate”: What do you think?
Some experts .. http://bit.ly/6XvJVe - realdiggity:
Fed Chairman Bernanke Says Low Rates Back Then Were “Appropriate”: comments http://bit.ly/4OuXMn
- AgentGenius:
#agnow To sit back and blame the fed is to completely ignore every pundit on television and in the financial world … http://bit.ly/8p8U12
- AgentGenius:
#agnow Go further down that road, Benn. The Fed is a handy whipping boy for those who used the alphabet soup of Wal… http://bit.ly/8p8U12
- AgentGenius:
#agnow But Jeff, more regulation would have meant not enough dinner to go around, come on, now! Pass the gravy! http://bit.ly/8p8U12
- BHG Real Estate:
Fed Chairman Bernanke Says Low Rates Back Then Were "Appropriate" http://ow.ly/Syog
- AgentGenius:
#agnow The perfect rejoinder.
The point on which we surely agree, when it comes to regulation: We don't want … http://bit.ly/8p8U12
- AgentGenius:
#agnow Call me obtuse, but I never did understanding collateralizing a depreciating asset … http://bit.ly/8p8U12
Benn Rosales
Conal Campbell
Elijah May
Lani Rosales
Tara Steele
Marti Trewe
Charlene Jimenez
To sit back and blame the fed is to completely ignore every pundit on television and in the financial world telegraph their next moves in hopes of keeping rates the same or dropping a percentage point. During those years I’ve only ever heard complaints if he raised or kept rates the same when most were suggesting a move downward. The problem we faced is still buried in the incentive to borrow regardless of worthiness and a failure to verify worthiness on top of inflated housing prices. I’m not sure how in the hell you blame the fed when everyone was at the dinner table on this one.
Go further down that road, Benn. The Fed is a handy whipping boy for those who used the alphabet soup of Wall Street created collateralized instruments. If they’d been regulated by those charged with oversight, where would we be today? IMHO, we’d be in the recovery from a normal down cycle.
The massive debt wouldn’t have been possible — WS would’ve been headed off at the pass before the damage could’ve been done. Alas, we can now only hope to have learned the lesson previous dozens of generations before us have: If your regulators ain’t showin’ up for work, everyone pays the price.
But Jeff, more regulation would have meant not enough dinner to go around, come on, now! Pass the gravy!
The perfect rejoinder.
The point on which we surely agree, when it comes to regulation: We don’t want more, we want the rules in force to, you know, be enforced. That and not allowing banks to be investment houses in any way shape or form.
An example of existing laws going without enforcement is illegal immigration, especially in the western states. We all know what would end it overnight. A 30 day grace period to allow employers to purge their labor force of illegals. This would be followed by random, unannounced inspections. Illegals would be taken away and deported. Employers would have a choice, pay a heavy fine, or close their doors for a specified time period.
How long do ya think the hiring of illegals would continue?
Call me obtuse, but I never did understanding collateralizing a depreciating asset …