The Federal Reserve announced yesterday that Fed Vice-Chair Donald Kohn is retiring.  Kohn had served the Fed for four decades, had been a member of the Board since 2002, and Vice-Chair since 2006.  We thought it would be useful to look back at a couple of Kohn's speeches over the last few years.  We've found two that bear watching.  One is from last spring, when Kohn addressed the Financial Markets Research Center Conference at Vanderbilt University.  In his speech, Kohn firmly defended the Fed's actions over the previous 20 months, and outlined how the Fed is the key player in guiding economic recovery:

In the fall of 2007 Kohn spoke at the Council on Foreign Relations.  His speech came just a few months after we started seeing housing markets tremble, so the central focus was market turbulence.  And he directly addressed the Fed's during times of "moral hazard," stating:

Central banks seek to promote financial stability while avoiding the creation of moral hazard. People should bear the consequences of their decisions about lending, borrowing, managing their portfolios, both when those decisions turn out to be wise and when they turn out to be ill-advised. At the same time, however, in my view, when the decisions go poorly, innocent bystanders should not have to bear the cost. In general, I think those dual objectives -- promoting financial stability and avoiding the creation of moral hazard -- are best reconciled by central banks focusing on the macroeconomic objectives of price stability and maximum employment.

Here is the full speech: