The surge in populist politics that helped fuel President Donald Trump’s victory and the rise of progressives on the left wasn’t triggered by U.S. policy makers response to the 2008 financial crisis, said former Federal Reserve Chairman Ben Bernanke.
Responding to those who hang today’s political movements around the neck of the credit crunch, Bernanke said at a Brookings Institution event that dissatisfaction had been rising for decades as wage growth stagnated and upward mobility faltered. Though the financial crisis didn’t help, he said, it wasn’t the primary driver.
“That is a wrong premise,” Bernanke said, sitting beside former Treasury Secretaries Timothy Geithner and Hank Paulson. The three men, who led the U.S.’s response to the meltdown, convened in Washington on Wednesday to discuss how they sought to limit the damage from the Great Recession a decade after its occurrence.
The three spoke at length about how difficult it was to manage the rescue of Wall Street, while trying to persuade Americans that taxpayer bailouts of financial firms were actually meant to help people stay in their homes and keep their jobs. Paulson said the Treasury and Fed had to make decisions that benefited banks in order to protect the financial system, but the moves were viewed as rewarding “the arsonists.”
“It’s a hard case to make, and we were unable to make it,” Paulson said. And later developments made it even harder, he noted, pointing to big financial-firm executive bonuses in 2009. “When the banks were earning big money, they turned around and paid big bonuses. That was more than I could stomach.”
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