In a rare moment of candor shown by a government official, former Fed Governor Donald Kohn apologized about the financial crisis yesterday, in a confirmation hearing toward his appointment to a committee on financial stability. Unfortunately for Americans, the committee isn't here, but instead in the U.K., which may explain why Mr. Kohn felt able to speak so freely.
I first saw this speech reported in the Financial Times, where it was quoted at length. From what the FT picked up, it sounds as though Mr. Kohn made a heartfelt statement about the Fed being asleep at the switch, along with many others:
Mr.Kohn recanted many of his previous views in front of [the members of Parliament].
...[H]e "deeply regretted" the pain caused to millions of people around the world, admitting that "the cops weren't on the beat."
...The former Fed official was willing to offer an apology when asked by one of the committee.But it sounds as though he had prepared something to say:
...[P]eople in the markets can get too relaxed about risk,...that incentives matter even more than he thought, and transparency is more important than he thought.A Wall Street Journal blog had a short item, but with a different emphasis altogether:
...Kohn said the Federal Reserve wasn't solely responsible for allowing the crisis to develop.
"It is too narrow to put it all on the Federal Reserve," he said. "The fact that there were similar circumstances in other parts of the world suggests to me that there is a lot of blame to go around. Most of the blame should be on the private sector."And to give credit where it's due, the blog Trust Your Instincts also wrote on the mea culpa.
I haven't been able to find the full speech to judge for myself.
It's great that Mr. Kohn is sharing his feelings -- maybe one of these days we'll hear them ourselves.