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10 Quotes by Fed Chief Ben Bernanke

By    |   Saturday, 11 July 2015 09:21 PM

Federal Reserve Chair Ben Bernanke led the country through the 2008 economic crisis with a series of creative and unprecedented moves. Under Bernanke, the bank stimulated the economy by a process called quantitative easing.

Investopedia calls this policy unconventional
and describes it as a process where “a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.” The result is a flood of capital to lending institutions.

Here are 10 quotes from Ben Bernanke during this challenging time, according to the Federal Reserve Archival System for Economic Research (FRASER).

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1. “Although poor underwriting and, in some cases, fraud and abusive practices contributed to the high rates of delinquency that we are now seeing in the subprime ARM market, the more fundamental reason for the sharp deterioration in credit quality was the flawed premise on which much subprime ARM lending was based: that house prices would continue to rise rapidly.”
— to the Women in Housing and Finance and Exchequer Club, January 10, 2008

2. “Although our recent actions appear to have helped stabilize the situation somewhat, financial markets remain under considerable stress. Pressures in short-term bank funding markets, which had abated somewhat beginning late last year, have increased once again. Many lenders have been reluctant to provide credit to counterparties, especially leveraged investors, and have increased the amount of collateral they require to back short-term security financing agreements. To meet those demands, investors have reduced their leverage and liquidated holdings of securities, putting further downward pressure on security prices.”
— to the Congressional Joint Economic Committee, April 2, 2008

3. “Inflation has also been a source of concern. The price index for personal consumption expenditures rose 3.4 percent over the twelve months ending in February, up from 2.3 percent over the preceding twelve-month period. To a large extent, this pickup in inflation has been the result of sharp increases in the prices of crude oil, agricultural products, and other globally traded commodities.”
— to the Congressional Joint Economic Committee, April 2, 2008

4. “The financial and credit market turmoil that began last summer has raised a number of significant issues of public policy, including questions concerning the maintenance of financial stability, the supervision and regulation of financial institutions, and the protection of consumers in their financial dealings.”
— to the 44th Annual Conference on Bank Structure and Competition, May 15, 2008

5. “The problems with subprime mortgage underwriting were disguised for a time by the continued appreciation in home values. As long as house prices kept rising, subprime borrowers saw their home equity increase and were often able to refinance into more-sustainable mortgages. But when house prices began to stagnate and then fall, many subprime borrowers found themselves trapped in mortgages they could not afford.”
— to the 44th Annual Conference on Bank Structure and Competition, May 15, 2008

6. “The current economic and financial situation reflects, in significant part, the unwinding of two of these longer-term developments — the housing boom and the credit boom — and the continuation of the pressure of global demand on commodity prices.”
— to the International Monetary Conference, June 3, 2008

7. “The Federal Reserve is pursuing its objectives through several means. First, we have eased monetary policy substantially and proactively to address the sharp deterioration in financial conditions and to forestall some of the potential adverse effects on the broader economy. Our decisive policy actions were premised on the view that a more gradual reduction in short-term rates could well have failed to contain the financial and economic problems confronting us. For now, policy seems well positioned to promote moderate growth and price stability over time.”
— to the International Monetary Conference, June 3, 2008

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8. “The crisis we face in the financial markets has many novel aspects, largely arising from the complexity and sophistication of today's financial institutions and instruments and the remarkable degree of global financial integration that allows financial shocks to be transmitted around the world at the speed of light. However, as a longtime student of banking and financial crises, I can attest that the current situation also has much in common with past experiences.”
— to the Economic Club of New York on Oct. 15, 2008

9. “The global economy will recover, but the timing and strength of the recovery are highly uncertain. Government policy responses around the world will be critical determinants of the speed and vigor of the recovery.”
— at the London School of Economics Stamp Lecture, Jan. 13, 2009

10. “Although the federal funds rate is now close to zero, the Federal Reserve retains a number of policy tools that can be deployed against the crisis. One important tool is policy communication. Even if the overnight rate is close to zero, the Committee should be able to influence longer-term interest rates by informing the public's expectations about the future course of monetary policy.”
— at the London School of Economics Stamp Lecture Jan. 13, 2009

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Federal Reserve Chair Ben Bernanke led the country through the 2008 economic crisis with a series of creative and unprecedented moves. Under Bernanke, the bank stimulated the economy by a process called quantitative easing.
Federal Reserve, Bernanke, quotes
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2015-21-11
Saturday, 11 July 2015 09:21 PM
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