Bernanke's Unprecedented 60 Minutes Interview; "We've Averted" Another Great Depression

Federal Reserve Chairman Ben Bernanke had his much anticipated interview with 60 Minutes last night. The interview was a move by Bernanke to connect with Main Street, as U.S. citizens feel lost with the billions of bailout money being given to financial institutions while job losses mount. This was an unprecedented move by Bernanke, as sitting Fed Chairmen never do interviews.

In his interview, Bernanke said we can't have a sustained recovery until the financial system stabilizes, which he says is happening. He maintains the recession will be coming to an end later this year and sees a recovery beginning next year.

When asked if we are heading into another Great Depression, Bernanke confidently said, "I think we've averted that risk. I think we've gotten past that."

On Lehman Brothers' failure, Bernanke said the ripple effects from Lehman's failure proves that you cannot let a large internationally active firm fail in the middle of a financial crisis. Bernanke said they didn't have the option and tools to save Lehman Brothers.

Bernanke said out of all the events that have occurred, AIG (NYSE: AIG) makes him the angriest. He said the company made "unconscionable bets" and when the bets went wrong, "we had a situation where the failure of that company would have brought down the financial system." Bernanke said he slammed the phone down more than a few times on discussing AIG. He said he understands why the American people are angry. But he said he had no choice but to rescue AIG or risk "the whole U.S. economy."

Bernanke said the financial system was "very close" to a complete collapse in the second week of October. He said if the powers to inject capital into the banks was not granted by Congress, we could have had a, "much, much worse outcome."

When asked if the money the Fed is spending is tax money, Bernanke explained that it was not and is much more "akin to printing money than it is to borrowing." But Bernanke said, "we need to do that, because our economy is very weak and inflation is very low." Bernanke said when the economy begins to recover, "we need to unwind those programs."

Bernanke believes it was the Federal Reserve itself that helped turn a recession in 1929 into a global calamity. He said their two big mistakes were to let the money supply contract very sharply and the second was to let the banks fail.

When asked if all the big banks the Fed regulates are solvent Bernanke said, "I believe they are, yes." He explained the "stress test" that is being performed on the banks. When asked if he is committing that he will not let any of these banks fail, Bernanke said, "They are not gonna fail. But what we can do, should it be necessary, is try to wind it down in a safe way."

When asked what keeps him up at night, Bernanke said the biggest risks is that we don't have the political will to solve this problem.

To stop this from happening again, Bernanke said more regulation is needed and regulators need the power to unwind large global financial companies.

Bernanke said one of the first signs of recovery will be if a large bank can raise private equity.

When asked if he had a message for the American people, Bernake said he has three:
1. The Federal Reserve is here, and is gonna do everything possible to support this recovery
2. Recovery is not gonna happen until the financial markets and the banks are stabilized. Gonna take some patience.
3. Every confidence that this economy will recover, and recover in a strong and sustained way.

Below is the "Must See" video from CBS's 60 Minutes:
Interview Part 1

CBS Interview Part 2

You May Also Be Interested In

• Rubrik IPO: 5 key things to know
• Biohaven Pharma (BHVN) Prices 5.6M Share Offering at $41/sh
• NRx Pharmaceuticals (NRXP) Prices $2M Share Offering at $3.30/sh