These words from one of the prime architects of this so-called “rescue” plan. But oh what a difference a year and a half makes…
At a time in 2007 when many had already gone on record forecasting today’s economic status, Bernanke was busy reassuring us.
The statements below are from an old WSJ article available only via archival pay to view. So I’ll use excerpts from the Economists’s View blog back at that time for Bernanke’s statements.
Bernanke Plays Down Threat From Subprime Defaults, by Stephen Wisnefski and Jesse Thomas, WSJ: Federal Reserve Chairman Ben Bernanke said Thursday that the financial system can withstand the fallout from the subprime-mortgage market “without serious problems.”
“We have spent a bit of time evaluating the financial implications of the subprime issues, tried to assess the magnitude of losses, and tried to determine how concentrated they are,” Mr. Bernanke said in response to a question following a speech here. “There is a sense that, although there is always a possibility for some kind of disruption …, the financial system will absorb the losses from the subprime mortgage problems without serious problems.” …
He also said he doesn’t expect the subprime problems to have significant spillover to the rest of the economy. …
Asked by an audience member about whether the Fed is concerned about risks for banks amid the spate of large private-equity deals, Mr. Bernanke acknowledged there are “some significant risks associated with the financing of private equity.”
“We are looking at that. We do think it’s very important for banks to be quite aware of the risks associated with working with private-equity firms,” he said. …
Facing criticism from members of Congress about lax regulation, Mr. Bernanke in his prepared remarks also promised that the Fed would do everything possible to crack down on abuses that have put millions of homeowners in jeopardy of defaulting on their mortgages. …
And this is one of the architects of “the cure”?? Gee, I feel better already…. After all, we’re *only* considering a massive step towards socialism by nationalizing a large sector of the free market.
Judgment’s a popular word nowadays. And in this case, I’d say that the Bush appointed/Congress confirmed appointment of Bernanke was a result of highly overrated credibility.
When you look at these statements not so long ago, my confidence is more than waning in not only Bernanke and Goldman Sachs’ Paulson coming up with “the cure”, but whether we should even place unquestionable faith in their warnings of impending doom.
Vietnam era Navy wife, indy/conservative, and an official California escapee now residing as a red speck in the sea of Oregon blue.