Bernanke admits mistakes, says Fed should stay independent
Saturday, 5 December 2009
WASHINGTON, Dec 3 (AFP): Federal Reserve chairman Ben Bernanke on Thursday admitted "mistakes" leading up to the economic crisis but argued the central bank's independence should not be limited in financial system reforms.
Bernanke defended his record at a stormy Senate Banking Committee hearing on his confirmation for a second term as chairman, but also spoke to the need for reforms that would avert future crises without compromising the Fed's independence from politics on monetary policy.
"There were mistakes made all around," Bernanke said when asked if he would change what the Fed had done.
For bank regulations, he said "We should have done more. We should have required more capital, more liquidity. We should have required tougher risk management controls."
Bernanke's hearing opened after one senator used a prerogative in the Senate to place a "hold" on the nomination, which could delay his confirmation, and other lawmakers offered blunt criticism of the powerful Fed chief.
"I did not anticipate a crisis of this magnitude and severity," Bernanke told that panel.
"But given that it happened, many of the banks... were not adequately prepared in terms of their reserves, in terms of their liquidity. That is a mistake we won't make again."
Bernanke said the crisis calls for "strengthening regulation and strengthening supervision" in a way to "provide a more holistic macro-prudential approach so that we're not reliant on each individual regulator in their own narrow sphere."
But Bernanke warned senators about placing too much political oversight on the Fed, particularly on its role in setting monetary policy.
Bernanke defended his record at a stormy Senate Banking Committee hearing on his confirmation for a second term as chairman, but also spoke to the need for reforms that would avert future crises without compromising the Fed's independence from politics on monetary policy.
"There were mistakes made all around," Bernanke said when asked if he would change what the Fed had done.
For bank regulations, he said "We should have done more. We should have required more capital, more liquidity. We should have required tougher risk management controls."
Bernanke's hearing opened after one senator used a prerogative in the Senate to place a "hold" on the nomination, which could delay his confirmation, and other lawmakers offered blunt criticism of the powerful Fed chief.
"I did not anticipate a crisis of this magnitude and severity," Bernanke told that panel.
"But given that it happened, many of the banks... were not adequately prepared in terms of their reserves, in terms of their liquidity. That is a mistake we won't make again."
Bernanke said the crisis calls for "strengthening regulation and strengthening supervision" in a way to "provide a more holistic macro-prudential approach so that we're not reliant on each individual regulator in their own narrow sphere."
But Bernanke warned senators about placing too much political oversight on the Fed, particularly on its role in setting monetary policy.