NEWSHOUR BOOKSHELF - "The Courage to Act"

"What it was like to head the Fed during the 2008 meltdown" PBS NewsHour 10/8/2015

Excerpt

SUMMARY:  "In “The Courage to Act,” former Federal Reserve chairman Ben Bernanke writes that the global economic collapse of 2008 could have resulted in a crisis akin to 1929 had he, his colleagues and policymakers around the world acted differently.  He joins Judy Woodruff to discuss his memoir of that turbulent time and its aftermath.

JUDY WOODRUFF (NewsHour):  He took on perhaps the most important job in the financial world a year before a global economic collapse.

Former Federal Reserve Chairman Ben Bernanke reflects on that turbulent time in a new book, “The Courage to Act: A Memoir of a Crisis and Its Aftermath.”

Ben Bernanke, welcome to the program.

BEN BERNANKE, Former Chairman, Federal Reserve:  Thank you for inviting me.

JUDY WOODRUFF:  So, you write in this remarkable book that takes us inside not only your life, inside the Fed, a place we don’t hear about very often, that if you and your colleagues had not acted as you did in 2008, that we could have seen something like 1929 again.

Do you really believe that might have happened?

BEN BERNANKE:  Well, nobody can know for sure, but, as an academic, I studied the Great Depression.  I studied how financial panics affect the economy.  And I was very concerned about that, you know, even before Lehman Brothers, even before the financial panic hit its peak.

But after Lehman Brothers, and when the financial panic accelerated, we saw just a tremendous drop-off in the economy, as sharp as the beginning of the Great Depression.  So, I really do believe that it would have been a very, very serious and protracted downturn if the financial crisis had not been arrested.

JUDY WOODRUFF:  So, the title — in the title is “The Courage to Act.”

But I guess one question is, did you and your colleagues really have a choice?  If things were about to fall apart, what else could you have done?

BEN BERNANKE:  Well, the title refers to policy-makers around the world.

It was a very chaotic situation, a very scary situation, big, high-stakes decisions and in a very uncertain and politically difficult environment.  And people — policy-makers could have been passive.  That was what some commentators were urging, for example, that we should just step back and let the market take care of it.

So it was very difficult to do that.  And I’m glad to have been part of a Fed and Treasury team that took the action that was needed.