'Panic': The Documentary That Discusses The 2008 Financial Crisis And Today's Economy Ben Bernanke, former chairman of the Federal Reserve, joins us to talk about "Panic," a VICE documentary about the financial crisis of 2008, and where the American economy stands today.

'Panic': The Documentary That Discusses The 2008 Financial Crisis And Today's Economy

'Panic': The Documentary That Discusses The 2008 Financial Crisis And Today's Economy

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Ben Bernanke, former chairman of the Federal Reserve, joins us to talk about "Panic," a VICE documentary about the financial crisis of 2008, and where the American economy stands today.


This week's turbulence on Wall Street makes it a good moment to reflect on the financial crisis 10 years ago when the U.S. economy, and maybe the world's, almost collapsed.


GEORGE W BUSH: I asked, are we headed for a Great Depression? And Bernanke said, you know, looks that way.

SIMON: That's former President George W. Bush in the new VICE documentary, "Panic." The film looks back with recollections from former presidents, along with Warren Buffett, Nancy Pelosi and many more, including Ben Bernanke, then-chairman of the Federal Reserve and a scholar on the Great Depression. We spoke to Ben Bernanke about then and now.

BEN BERNANKE: The U.S. economy went into a mild recession beginning at the end of 2007, but things didn't really collapse until the end of 2008. So when we were going to Congress and asking for help to stop the bleeding in the financial sector, the U.S. economy was still not in freefall. It was hard initially because people could see what was happening on Wall Street, but I remember a congressman asking me, you know, look; my constituents back in Iowa are not seeing this yet. And I said to him, you will, you will.

SIMON: The documentary reminds us that a lot of the financial crisis seemed to be set off by something that was - seemed laudable at the time or desirable at any rate. Here's Austan Goolsbee, now economist again at University of Chicago. He was President Obama's chair of the Council of Economic Advisers.


AUSTAN GOOLSBEE: We came up with all these ways to get loans to more people. You know, it was - certainly felt exciting at the time that we were going to spread the American Dream all over the place.

SIMON: Meaning housing loans, of course. What was wrong with that with hindsight?

BERNANKE: Well, I mean, Austan is absolutely right. Subprime lending, which was lending to potential homeowners with lower credit scores, was broadly popular because it was helping more people become homeowners and expanding access to homeownership. But the problem was that things went too far and lenders, including many lenders who were invisible to the federal regulators - they weren't regular banks, they were mortgage originators located in strip malls - were making very, very bad loans, packaging them up into securities and then selling them off to investors who didn't really know what was in the packages they were buying.

And what was really disastrous was not the subprime loans themselves because, overall, the subprime mortgages were a pretty small amount of money compared to the whole economy but rather the fact that like mad cow disease, when you find out that a few cows in some western state have mad cow disease and you stop buying any kind of beef, by the same token, when investors began to find out that some of the assets that were linked into the subprime mortgages were going bad, they became very distrustful of all kinds of credit. And it was the run on all kinds of private credit that really created the tremendous crash.

SIMON: Is it hard to see the pictures of, you know, Wall Street executives with big smiles and think of Americans who lost their homes or their jobs?

BERNANKE: I certainly agree that it looks and is unfair. Whenever I see a bumper sticker saying, where's my bailout, you know, I feel bad about that. And I completely understand why people would be angry. I completely understand why they would think it's unfair. But I would turn it around and say, well, what did you want us to do? You wanted just to let - do you want us to allow the system to collapse and perhaps risk many years of high unemployment and a failing economy? I think that we made the choice we had to make.

SIMON: Is the economy strong now?

BERNANKE: Well, we've been in a 10-year recovery. At the moment, the economy's in very good shape. We have - you know, the Fed focuses on inflation and unemployment. Inflation is about at the Fed's 2 percent target; unemployment, less than 4 percent. It's the lowest it's been in half a century. So, yes, it's in very strong shape at the moment. One of the reasons it's in strong shape is the fiscal policy, the tax cuts about a year ago, which have increased spending power. And it caused higher growth in 2018. Now, some of that is - seems to be waning. So my guess is that we'll have somewhat slower growth going forward, but I do think we have a very good chance of breaking the all-time record for a sustained expansion, which is 10 years. And that would come next June.

SIMON: May I ask, Mr. Bernanke, you're an identifiable figure in history and contemporary events, how many people come up to you and want to shake your hand and thank you for saving the financial system? And how many people say, how could you let those Wall Street so-and-sos get away with it?

BERNANKE: I must say, people are extremely nice. I see people on the street. I see people in the airport. And they come up to me, and they say nice things. And I'm very grateful, and I hope that, you know, even if they disagree with what we did, they recognize that we were doing what we were doing because we felt it was the right way, the best thing to try to preserve our economy and to try to advance the welfare of all Americans.

SIMON: Ben Bernanke is one of a chorus of distinguished people in the VICE special report, "Panic." It airs Monday night on HBO. Thanks so much for being with us, sir.

BERNANKE: Thank you, Scott.

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