Ben Bernanke, who during the depths of the financial crisis worked seven-day weeks, sometimes availing himself of an office couch to catch some sleep, is now in memoir mode, collecting his thoughts for an upcoming book and for an audience of thousands at Schwab Impact.
Speaking to a nearly packed 5,000-seat theater at the Denver gathering, the former Fed chairman quipped: “Now I read the newspaper and say, ‘Gee, that’s a serious problem, I hope somebody does something about it.’”
The economist and avid baseball fan also appreciates no longer receiving urgent phone calls from former Treasury secretary Hank Paulson that always seemed to come in the 4th inning of Washington Nationals games, leaving the Fed chairman with the challenging task of finding a place in a crowded stadium where he could carry out an important policy discussion.
Those calls came during the times he managed to get away, even if only taking a walk or reading a book, which Bernanke made a point of doing from time to time as a means of maintaining calm and gaining perspective.
And the man who presided over crisis-era monetary policy actually enjoys Washington, where he continues to reside, saying the nation’s capital city is “a nice place if you don’t have to give Congressional testimony,” though he rues the invention of the selfie, now that he has become a recognizable figure.
That wasn’t the case when he first assumed the chairmanship in 2006, the same year his daughter first went way to college. Her roommate asked Benanke’s daughter what her father did for a living, and when she replied he was the chairman of the Federal Reserve, the young woman gasped: “You mean your father is Alan Greenspan!”
The data-loving economist added that 12% of the public still thinks Greenspan’s running the Fed, eight years after his departure from the job.
Reflecting on his eight-year chairmanship, Bernanke likely surprised few in calling the “Lehman Brothers-weekend” the critical turning point in the financial crisis.
“My view was that it was essentially a panic,” said Bernanke, an economic historian by training. But instead of having depositors run on banks, it was an institutional-level wholesale market that panicked about its money, for which reason “the cost of bank funding shot through the roof in December 2008.”
But that frightening month was also a turning point for a positive reason, he said, noting that it was then that Congress undertook measures, like its Troubled Asset Relief Program (TARP), that helped stabilize the financial system.
The measure was deeply unpopular with the public, and Bernanke said there are still those who charge the Fed was busying itself helping its buddies on Wall Street rather than trying to prevent an economic collapse.
Indeed, during that time he called one Senator to urge his approval of TARP, asking him how his constituents felt about the measure. The Senator replied that voter sentiment was running about 50-50: “50% said “no” and the other 50% said ‘hell no.’”
Bernanke said that the Fed had no recourse other than to allow Lehman to fail since the 12 CEOs he invited to inspect the firm’s books eschewed taking over the firm. His two main hopes were Bank of America and Barclays. B of A eventually acquired Merrill Lynch after turning down Lehman, while Barclays was “prevented by its regulator” from acquiring the troubled firm.