June 7, 2009
Ben Bernanke's Greatest Challenge
Fed Chairman Discusses Recession, Financial Rescues And Recovery In Wide-Ranging 60 Minutes Interview
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Play CBS Video Video The Chairman Part 1 In a rare interview with a sitting Federal Reserve chairman, Ben Bernanke tells Scott Pelley what went wrong with America's financial system and how it caused the current economic crisis.
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Video The Chairman Part 2 Ben Bernanke tells Scott Pelley what the Fed is doing to help fix the current economic crisis and when he expects the crippling recession to end.
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Federal Reserve Chairman Ben Bernanke (CBS)
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President Barack Obama, left, speaking with Federal Reserve Chairman Ben Bernanke. (White House photo)
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Interactive Inside The Fed A history of the Federal Reserve, glossary of terms and a look at changing interest rates.
Aside from the president he's the most powerful man working to save the economy, but Ben Bernanke had never done an interview until he sad down with 60 Minutes correspondent Scott Pelley earlier this year.
Bernanke is the chairman of the Board of Governors of the Federal Reserve System, better known as the Fed. The words of any Fed chairman cause fortunes to rise and fall and so, by tradition, chairmen of the Fed do not do interviews - that is until now.
The Federal Reserve controls the economy by setting interest rates. But after the crash of 2008, Bernanke invoked emergency powers, and with unprecedented aggressiveness has thrown a trillion dollars at the crisis.
Ben Bernanke may be the most important Fed chairman in history. The question is, can he help lead America out of this deep recession and when?
"Mr. Chairman, I'm gonna start with a question that everyone wants me to ask: when does this end?" Pelley asked Bernanke.
"It depends a lot on the financial system," he replied. "The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis. We've seen some progress in the financial markets, absolutely. But until we get that stabilized and working normally, we're not gonna see recovery. But we do have a plan. We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time."
Asked if he thinks the recession is going to end this year, Bernanke said, "In the sense that this decline will begin to moderate and we'll begin to see leveling off. We won't be back to full employment. But we will see, I hope, the end of these declines that have been so strong in a last couple of quarters."
"But you wouldn't say at this point that we're out of the woods?" Pelley asked.
"No," Bernanke replied. "I think the key issue is the banking system and the financial system."
"I wonder, do you expect double digit unemployment?" Pelley asked.
"Well, it's hard to forecast exactly where we're going. Unemployment is rising. Job losses are still very severe. And no doubt, the unemployment rate's gonna go higher than it is. But I think, again, that if we do succeed in stabilizing the financial system, that we'll begin to see a slower pace of decline, and eventually, a stabilization that will set the basis for a recovery," Bernanke said.
"You seem to be saying that we're not heading into a new American Depression?" Pelley asked.
"I think we've averted that risk. I think we've gotten past that and now the problem is to get the thing working properly again," the chairman said.
Bernanke, age 55, has been chairman of the Federal Reserve Board since 2006.
For this interview, he opened up the Fed headquarters, rarely seen by the public. It's a monumental building along the National Mall. Construction started in 1935 in the depths of the Great Depression.
"You know Mr. Chairman I think the Federal Reserve, for most people, is a mystery," Pelley remarked.
"Well, it's an institution that people don't hear so much about but it's a very important one. It manages monetary policy for the country. It's one of the main tools we have for stabilizing our economy and keeping prices stable," Bernanke said.
Asked when it was founded, Bernanke told Pelley, "The Fed was created by Congress in 1913. And its original purpose was to deal with financial panics, which is what we're doing right now."
Bernanke's crisis started in 2007 with the mortgage meltdown; lenders began to fail. Bernanke cut interest rates repeatedly. In 2008, the Fed stopped the collapse of Bear Stearns by arranging a sale to another firm.
But then came the end of Wall Street as we knew it. Mortgage giants Fannie Mae and Freddie Mac were seized by the government. On Sept. 14, Merrill Lynch was sold in distress. The next day, the 158-year-old investment bank Lehman Brothers failed
"You didn't rescue Lehman Brothers. It set off a worldwide panic when it went bankrupt. And I wonder, looking back, whether you think that was a mistake," Pelley asked.
"There were many people who said, 'Let 'em fail.' You know, 'It's not a problem. The markets will take care of it.' And I think I knew better than that. And Lehman proved that you cannot let a large internationally active firm fail in the middle of a financial crisis. Now was it a mistake? It wasn't a mistake for the following reason: we didn't have the option, we didn't have the tools. All the Federal Reserve can do is make loans against collateral," Bernanke replied.
Produced by Henry Schuster and Rebecca Peterson
© MMIX, CBS Interactive Inc. All Rights Reserved.
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See all 312 CommentsThe Same people who killed Kennedy in 1963 are still in control,and Americans are "dumbed down" to the point of stupidity by the lap dog news media!!
I fear it is too late for us all!
Ben Bernanke disagreed with her theory and dismissed the idea. Tricia L. Murphy posed this question to Bernanke and the Federal Employees regarding the possibility of a future severe recession ? ?What if I am right? What steps can The Federal Government take NOW to prevent an economic melt down of the US and Global Economy? The hero will be the person who can come up with a strong well thought out economic plan to head off a global recession.?
Ben Bernanke and Tricia L. Murphy concluded the tour with a friendly wager - lunch in 8 years ? for the person who was correct.
Mr. Ben Bernanke, at your convenience, you may buy me that lunch?
Tricia L. Murphy,
Unemployed former
Gettysburg Licensed Battlefield Guide
Tricia.L.Murphy@live.com
PS ? The reports of my death have been greatly exaggerated.
Ben Bernanke disagreed with her theory and dismissed the idea. Tricia L. Murphy posed this question to Bernanke and the Federal Employees regarding the possibility of a future severe recession ? ?What if I am right? What steps can The Federal Government take NOW to prevent an economic melt down of the US and Global Economy? The hero will be the person who can come up with a strong well thought out economic plan to head off a global recession.?
Ben Bernanke and Tricia L. Murphy concluded the tour with a friendly wager - lunch in 8 years ? for the person who was correct.
Mr. Ben Bernanke, at your convenience, you may buy me that lunch?
Tricia L. Murphy,
Unemployed former
Gettysburg Licensed Battlefield Guide
Tricia.L.Murphy@live.com
PS ? The reports of my death are greatly exaggerated.
Dear, 60 Minutes Staff
I asked on the phone a few days back about Ben Bernanke?s 60 minutes interview comments- "Over the last dozen years or so, enormous amounts of savings has flowed into the United States, and some other industrial countries. That savings has come from China and East Asia. It's come from oil producers. And hundreds of billions of dollars, it has come into our financial system. And, you know, that would be great if we took that money and invested it wisely, and got a high return. But instead, our financial system didn't do a good job. We had a regulatory system that was like a sandcastle on the beach. When you had little small waves just lapping up against the sand castle, everything looked good. But when you had a big breaker come in, suddenly the system wasn't strong enough to deal with it."
You never asked Ben Bernanke for example if ARAMCO is a depositor in the FED, and if so, how much ARAMCO has deposited in the FED approximately, and other entities like it. This is interesting to me because I am writing an objective style nonfiction book on the subject of the most likely depositors in the Federal Reserve: how it all works within the petrodollar recycling system, and so forth :how the west would be much different without such a macro economic dynamic.
How I got started on this topic is when my uncle sometime ago, who is a retired executive from the Saudi state owned oil company, told me this> He said, "ARAMCO is the largest depositor in the FED, and dwarfs the American Government's stake in the bank. No other depositor holds a candle to the Saudi's deposits in the FED." He also said, "Without first producers (energy companies) demanding the currency they trade their product in, the currency we all use each and everyday, would thus have no upstream demand. Without this pull upstream for currency the Federal Reserve Notes the FED issues to the public would be rendered worthless." He also said to me, "Note, taxes and energy paid in what ever is demanded at the final point upstream is money."
I would like to lay it all out in my book, but I lack first quotable sources to do this. So if possible I ask, "Can you please give me access to other parts of Ben Bernanke's interview I may use in my book that did not make the final cut?" This if any such material was even made. Specifically being any material that I could use related to the topic I have described needed for first source documentation which I need for my book outlined within this email.
Sincerely, Robert Edward Kroff
Phone:541-994-2114
6432 SW Inlet Ave. Lincoln City, OR 97367
These big bankers are big time crooks as it looks like they own Washington DC.
Senator Dick Durbin of Illinois says the "bankers frankly own the place"(the senate) as his bill to save 1.7 million americans their homes.
http://mgx.com/blogs/2009/05/02/olbermann-senate-backs-bankers-over-homeowners/
Check out former bank regulator William Black on Bill Moyers as he explains the flim flam game run on the United States that get`s zero air play on the mainstream media.
http://www.youtube.com/watch?v=Rz1b__MdtHY&feature=channel_page
This is just typical Main Stream Medias attempt to cover up what is really on the Plate. Let everyone Know the truth heh! . What A Joke. I tell you what you should be covering is Ron Paul's H.R. 1207 and the medias attempt to not let the American People to make concise intellectual decisions . That is why we have a tyrannical Government in place today, that is turning our Great Republic into a supposed Democracy. You keep your Change and I will keep my Mind.
Perhaps you forget that Mr. Bernanke sat in on every meeting with the presidents and ceo's of our failed investment banks. He knew well in advance about the huge bonuses given to top executives after having received taxpayer bailout money. He knew and did nothing. He also masterminded giving the hundreds of billions of dollars of taxpayer money to these failed banks. Giving this money to banks with no strings attached....such as requiring them to loan the bailout money to consumers and small businesses. This was bad judgement on his part. The banks took the money and sat on it, making our recession deeper. Mr. Bernanke says he'll know when there are signs of a turnaround when the banks acquire private equity. I say we'll know the signs of recovery when the average person or a small business can easily get a loan.
Drive down the economy slow and hard to the breaking point.
This is done on purpose so once the dollar is about equal to that of India and China then pretty soon everyone will want to buy from USthen off shoring will come back as then when this happens offshoring will become expensive and prohibitive.
It is the worlds banks to try and make all nations economy about or near equal to each other in the terms of equal trade dollar strength. The last country that we will help is africa and in 20 years time soon all emplyers will choose africa aas the country after ASIA and Russia are too expensive to off shore to.
Think the above is lies? examine all you see and the economy will not rebound. it will get worse and worse.
this is not a republican or democrat or independant or a choice made by congress but by the bankers.
My husband and I each have our own business and we have made a living for the past 20-plus years. The archetypal American enterpreneurs, no? We have no safety net: no one pays unemployment insurance, healthcare, retirement, disability, re-training, vacation or half of our social security requirement for us. This all comes out of our pockets, and we are not even eligible for unemployment. Our businesses have both have suffered significantly in the past year.
For us, and hundreds of thousands like us, the answer is two-fold: create work (and then people will once again hire our services) and provide good, affordable health care NOT tied into one's job.
Why, instead, are we bailing out the bankers/businessmen/speculators who messed us up so badly? They should be made to pay the consequences, not bailed out. Jail? Restitution? Are the regulators culpable? WE would be in jail for fraud if we cheated our clients. No one is bailing out our small businesses.
Bill Goodman
deftly avoided; namely, the unconscionable negligence of Mr. Libertarian Greenspan, who was shocked, shocked! that the markets did not regulate themselves. Maybe Bernanke felt he had to make nice to his ignoble predecessor. Buthow about at least a passing mention of the repeal of Glass-Steagal (sp?) which made it possible for the greedy, crooked UNREGULATED investment banks to wreck the housing market.
The men in the shadows have a plan. Hopefully, we won't be living in China when they are done working their magic.
What 60 minutes did not explain, but only touched on, is why is the Fed so secretive? Where are those unaccounted for trillions of dollars they have loaned out and no one knows where it's gone.
I don't believe this guy (Bernanke) for a moment, what I do believe is he (the fed) and Con-gress have off loaded a multi-generational debt that will continue to erode our standard of living...except for those who have profited most from this scam.
If anyone believes what they have done and are doing is legal, constitutional and will save us from ourselves...then I have some prime real estate for sale in Baghdad where you can raise your children safely...Gullibility and ignorance is a choice.
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