Tags: Bernanke | Financial Crisis | Wall Street | Jail

Bernanke: Wall Street Execs Should Have Gone to Jail for Crisis

Image: Bernanke: Wall Street Execs Should Have Gone to Jail for Crisis
Former Federal Reserve Chairman Ben Bernanke(Getty Imagaes)

By    |   Sunday, 04 Oct 2015 07:30 PM

Former Federal Reserve Chairman Ben Bernanke says some Wall Street executives should have gone to jail for their roles in the financial crisis that gripped the country in 2008 and triggered the Great Recession.

Billions of dollars in fines have been levied against major banks and brokerage firms in the wake of the economic meltdown that was in large part triggered by reckless lending and shady securities dealings that blew up a housing bubble.

But in an interview with USA Today published Sunday, Bernanke said he thinks that in addition to the corporations, individuals should have been held more accountable.

"It would have been my preference to have more investigations of individual actions because obviously everything that went wrong or was illegal was done by some individual, not by an abstract firm," Bernanke said.

Asked if someone should have gone to jail, the former Fed chairman replied, "Yeah, I think so." He did not, however, name any individual he thought should have been prosecuted.

Bernanke, who presided over the U.S. central bank during the financial crisis considered the worst since the Great Depression, said it was not up to him to decide whether to prosecute individuals, noting: "The Fed is not a law-enforcement agency."

"The Department of Justice and others are responsible for that, and a lot of their efforts have been to indict or threaten to indict financial firms," Bernanke added. "Now a financial firm is of course a legal fiction; it's not a person. You can't put a financial firm in jail."

Bernanke, who retired from the Fed last year after eight years as chairman, said of the financial crisis: "I think there was a reasonably good chance that, barring stabilization of the financial system, that we could have gone into a 1930s-style depression," he said. "The panic that hit us was enormous — I think the worst in U.S. history."

In the interview, Bernanke, whose memoir is being published this week, acknowledged that analysts were slow to realize how serious the economic downturn would become and faulted himself for not doing more to explain why it was in the public's interest to rescue the financial firms that helped cause the crisis.

"Every time I saw a bumper sticker which said, 'Where's my bailout?' it hurt," the newspaper quoted him as saying.

Bernanke is promoting his new 600-page memoir, "The Courage to Act: A Memoir of a Crisis and Its Aftermath," which is scheduled to be published Monday.

He began the book after leaving the Fed in 2014. The memoir details his take on the crisis in which the government took over mortgage giants Fannie Mae and Freddie Mac and provided hundreds of billions in aid to the biggest U.S. financial institutions.

The Associated Press obtained an early copy of the book last week. He writes that the taxpayer-provided bailouts of banks and Wall Street firms were hugely unpopular, but says they were necessary to avoid an economic catastrophe.

"I certainly was not eager to bail out Wall Street and I had no reason to want to bailout Wall Street itself," he told USA Today. "But we did it because we knew that if the financial system collapsed, the economy would immediately follow."

(Reuters and the AP contributed to this report).

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Former Federal Reserve Chairman Ben Bernanke says some Wall Street executives should have gone to jail for their roles in the financial crisis that gripped the country in 2008 and triggered the Great Recession.Billions of dollars in fines have been levied against major...
Bernanke, Financial Crisis, Wall Street, Jail
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2015-30-04
Sunday, 04 Oct 2015 07:30 PM
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