The Federal Reserve and the Financial Crisis: Lectures by Ben S. Bernanke

In this edited collection of lectures (originally delivered at the George Washington University in March 2012), Bernanke (Essays on the Great Depression) portrays the U.S. Federal Reserve’s actions during the 2008 financial crisis as consistent with the role of central banks, and as a series of unfortunately necessary improvisations. The most glaring issue that emerges is the mismatch between regulatory agencies, still operating with a Depression-era mindset, and today’s complex financial system. This situation was exacerbated leading up to the 2008 crisis by the undercapitalization of agencies such as Freddie Mac and Fannie Mae, and a flurry of innovative mortgage practices. Bernanke’s dispassionate, academic tone throughout contrasts, no doubt deliberately, with the sheer terror manifested by the media at the time. Bernanke offers no crystal-ball vision, noting dourly, “financial crises will always be with us.” The lessons learned include the virtues of making the Fed more transparent about its goals; the benefits of international coordination; and the need to end the “too-big-to-fail” dilemma. The sophisticated economist probably will find these speeches lacking in both financial details and theory; the more general reader probably will be thankful for this approach. Anyone interested in a primer on recent financial history will likely find Bernanke’s book to be worthwhile reading. 1 halftone, 39 line illus. (Mar.)