• Bernanke Defends Fed's Record: Wessel Weighs In

    Fed Chair Ben Bernanke took to Capitol Hill yesterday to defend his record as the nation's top central banker. The White House nominated Bernanke for another term, and the Senate banking committee is his first stop in getting confirmation for another term by the Senate. He took a series of shots from Senators across the political spectrum. Jim Bunning (R-KY) told Bernanke "your time as Fed chairman has been a failure." Bernanke defended his record, and told the committee that the Fed's actions helped the nation avoid a much larger economic catastrophe: We played a central role in efforts to quell the financial turmoil, for example, through our joint efforts with other agencies and foreign authorities to avert a collapse of the global banking system last fall; by ensuring financial institutions adequate access to short-term funding when private funding sources dried up; and through our leadership of the comprehensive assessment of large U.S. banks conducted this past spring, an exercise that significantly increased public confidence in the banking system. We also created targeted lending programs that have helped to restart the flow of credit in a number of critical markets, including the commercial paper market and the market for securities backed by loans to households and small businesses. Indeed, we estimate that one of the targeted programs--the Term Asset-Backed Securities Loan Facility--has thus far helped finance 3.3 million loans to households (excluding credit card accounts), more than 100 million credit card accounts, 480,000 loans to small businesses, and 100,000 loans to larger businesses. And our purchases of longer-term securities have provided support to private credit markets and helped to reduce longer-term interest rates, such as mortgage rates. Taken together, the Federal Reserve’s actions have contributed substantially to the significant improvement in financial conditions and to what now appear to be the beginnings of a turnaround in both the U.S. and foreign economies. David Wessel , economics editor for the Wall Street Journal, has spent the last few years studying the Fed closely for his book, In Fed We Trust: Ben Bernanke’s War on the Great Panic. In a recent interview with Big Think , he spoke about how the Fed's response to the global economic crisis has largely worked, but still contains some risk and uncertainty: You can watch the full interview with Wessel here . And you can watch yesterday's Senate hearings here .

  • NYT Reviews Wessel's 'In Fed We Trust'

    Wall Street Journal economics editor David Wessel 's work has been required reading/listening/viewing for anyone tracking the downs, and downs, and ups, and downs, and downs (you get the point) of the economy over the last year. Now he has a new book out: In Fed We Trust: Ben Bernanke's War on the Great Panic , Michiko Kakutani reviews the book in the New York Times , and calls it "essential, lucid — and, it turns out, riveting — reading." [Wessel's] overall assessment: “Every time officials at the Treasury or the Fed thought they finally had gotten ahead of the Great Panic, they turned out to be insufficiently pessimistic. This would be a distinguishing characteristic of this chapter in American economic history: even when officials thought they were planning for the worst-case scenario, they weren’t.” Three policy makers in particular receive low scores from Mr. Wessel. He argues that Mr. Paulson’s abrupt changes of course and failure to understand “the theater” of crisis management hurt his credibility and undermined public confidence. He says that President George W. Bush was “largely a spectator” to “the biggest threat to American prosperity in a generation” possibly because he knew how unpopular he was and figured “he would make Paulson’s job tougher if he appeared to be calling the shots” or because the Bush White House, “stumbling through its last few months, was simply exhausted and understaffed.” And he takes the former Fed chairman Alan Greenspan to task for allowing economic conditions to develop that fueled the credit crisis in the first place. Read the full review here . And read an excerpt of In Fed We Trust here .

  • Grading Bernanke

    Ben Bernanke has half a year left on his term as chair of the Federal Reserve , and at this point it is not certain whether he will be asked to serve another. Bernanke has said that he expects the economy to pick up later this year , and perhaps his future as chair depends on whether he is right or not. David Wessel , economics editor of the Wall Street Journal , assesses Bernanke's tenure in this short video, and says Bernanke "did a great job in saving us from something that could have been a catastrophe."