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Bernanke Says Fed Sought to Avert a ‘Second Great Depression’
By Scott Lanman and Timothy R. Homan
July 27 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke defended bailouts by the central bank and other unprecedented efforts to end the credit crisis, saying he sought to avoid a “second Great Depression.”
“In a financial crisis, if you let the big firms collapse in a disorderly way, it will bring down the whole system,” Bernanke said yesterday at a town-hall-style meeting in Kansas City, Missouri, taped for broadcast this week on PBS television. “I was not going to be the Federal Reserve chairman who presided over the second Great Depression.”
Bernanke’s appearance indicates he’s stepping up public- relations efforts while confronting criticism from lawmakers over government aid to big financial firms. His first term at the Fed’s helm ends Jan. 31, and President Barack Obama needs to decide whether to reappoint him for another four years.
Vincent Hogan of Kansas City, a human resources manager at General Motors Co. and a member of the forum’s audience, said he believed Bernanke showed “honesty and candor.”
Before the meeting, Hogan, 45, said he thought Bernanke acted under political pressure during the height of the financial crisis last year. “I understand now there were some dire economic situations back then,” he said in an interview.
The Fed rescued Bear Stearns Cos. and American International Group Inc. last year while backing creation of the $700 billion Troubled Asset Relief Program.
Bernanke, 55, said he had to “hold his nose” over the bailouts of large financial firms. Responding to a small- business owner “frustrated” over the billions of dollars in aid, Bernanke said, “I understand your frustration.”