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Bernanke: 'I Had To Hold My Nose' To Bail Out Banks
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Bernanke: 'I Had To Hold My Nose' To Bail Out Banks



Last night, the chairman of the Federal Reserve took questions from regular citizens, town-hall style for a TV show. The event, sponsored by "NewsHour with Jim Lehrer," is part of Ben Bernanke's effort to reassure people about the economy. Frank Morris of member station KCUR in Kansas City reports.

FRANK MORRIS: Normally, if you see a Federal Reserve chairman talking, he's before a Congressional committee on Capitol Hill. Yesterday, Ben Bernanke was on this hill, where the Federal Reserve Bank of Kansas City overlooks downtown. A couple of dozen protestors showed up, too.

Unidentified Woman: We want to audit the Federal Reserve.

MORRIS: Inside the new white, cube of a bank building, Bernanke sat down at a kind of a coffee table to chat with Jim Lehrer and some local folks that his show, "The NewsHour with Jim Lehrer," had chosen. It didn't take long for Ben Bernanke to go to work on the proposal the protestors were talking about, Congressman Ron Paul's bill to require the Government Accountability Office, Congress's investigators, to review Fed monetary policy.

He said that if passed the legislation would inject politics directly into decisions about interest rates.

(Soundbite of TV show, "The NewsHour with Jim Lehrer")

Mr. BEN BERNANKE (Federal Reserve Chairman): The Congress would have the authority any time to ask the GAO to come in and audit and look at and evaluate the monetary policy decisions made by the Fed. That's not consistent with independence.

MORRIS: A few members of the audience didn't think last year's bailouts were consistent with an open market. David Huston, a small business owner, had a long preamble to his question. Lehrer tried to hurry him up a little.

(Soundbite of TV show, "The NewsHour with Jim Lehrer")

Mr. DAVID HUSTON (Small Business Owner): But I truly believe small business and the companies that support…

Mr. JIM LEHRER (Host, "The NewsHour with Jim Lehrer"): Question, question.

Mr. HUSTON: …small business are getting short changed by the Federal Reserve, the Treasury Department and Congress. Am I wrong on that perception?

Mr. BERNANKE: It's a great question - a tough question, but a great question.

MORRIS: Bernanke said he had to basically create billions of dollars, to prop up Bear Sterns and AIG, arguing that if they failed, they'd take the whole financial system down with them.

(Soundbite of TV show, "The NewsHour with Jim Lehrer")

Mr. BERNANKE: I was not going to be the Federal Reserve Chairman who presided over the second Great Depression. And for that reason, I had to hold my nose and stop those firms from failing.

MORRIS: Bernanke said too big to fail has got to go. And he thinks there should be some way for the government to take over and dismantle enormous failing companies without disrupting the financial system. He says he supports establishing a new Fed division to monitor what he calls systemic risks.

Ben Bernanke admits that the Fed was slow to respond to the mortgage crisis, but he defended its consumer protection functions. And he assured the audience in plain language rarely used by the Federal Reserve that he's doing everything possible to help Main Street, too.

(Soundbite of TV show, "The NewsHour with Jim Lehrer")

Mr. BERNANKE: The Federal Reserve has been putting the pedal to the metal. We have the interest rate as low as it can go. We are putting everything we can into strengthening credit markets. We are buying up mortgage securities to bring mortgage rates down to get people into houses. So we are doing everything we can to support the economy, and we hope that that's going to, you know, get us going next year some time.

MORRIS: Some in the audience expressed concern that by then, all the Fed's spending may have minced the dollar's value and whipped up inflation. Bernanke assured the situation's in hand. And after the forum was over, a Fed employee passed out souvenirs, an unintended metaphor perhaps for what some fear Bernanke's aggressive policies may eventually do to the currency.

(Soundbite of TV show, "The NewsHour with Jim Lehrer")

Unidentified Man #1: Here's some free shred folks, thanks for coming by, we appreciate it.

Unidentified Man #2: Here, you want money?

Unidentified Woman #2: Thank you.

MORRIS: Shredded cash. Back outside by the fountains, Crosby Kemper, a former banker here representing the city library system, said he's one of those worried about all the money the Fed has been essentially printing lately, and would like to see Bernanke replaced when his term ends in January. Still, he thinks Ben Bernanke did a good job in this informal setting.

(Soundbite of TV show, "The NewsHour with Jim Lehrer")

Mr. CROSBY KEMPER (Former Banker; Represents Kansas City Library System ): He seems like a really Steady Eddy kind of a guy. You know, he was totally unflappable. He had good answers, I don't agree with him on a lot of stuff, but he had good thoughtful answers for everything, never lost his cool.

MORRIS: Kemper calls that a good quality in a central banker. It's one that's served Ben Bernanke as he tries to navigate around both the financial crisis and his critics, in Washington and across the country. For NPR News, I'm Frank Morris in Kansas City.

WERTHEIMER: The complete discussion with Chairman Bernanke will air in three parts beginning today on "The News Hour with Jim Lehrer."

(Soundbite of music)

WERTHEIMER: You're listening to MORNING EDITION from NPR News.

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