Federal Reserve Chairman Ben Bernanke is looking back in anguish at the 2008 economic crash, calling the government bailouts of Bear Stearns and American International Group ‘distasteful’ while insisting that his agency was ‘helpless’ when it came to rescuing Lehman Brothers.
CNN reports that Bernanke, in a lecture delivered at George Washington University in Washington, D.C., nonetheless defended the federal intervention into the financial services system as being the only possible course of action to prevent a greater catastrophe.
‘It was very difficult and in many ways distasteful intervention that we had to do on the grounds that we needed to do that to prevent the system from collapsing,’ Bernanke said. ‘But clearly, it is something fundamentally wrong with a system in which some companies are 'too big to fail.'’
Bernanke added that history is on the side of the Federal Reserve. "I think the view is increasingly gaining acceptance that without the forceful policy response that stabilized the financial system in 2008 and early 2009, we could have had a much worse outcome in the economy."
As for Lehman Brothers, Bernanke stated that its demise could not be avoided.
‘Lehman Brothers was in itself probably too big to fail, in the sense that its failure had enormous negative impacts on the global financial system,’ he lamented. ‘But there we were, helpless, because it was essentially an insolvent firm.’
Bernanke made his comments as part of a lecture series at the university. The Federal Reserve is posting the full videos and slides from the lecture on its website.