KANSAS CITY — Ben Bernanke, chairman of the Federal Reserve, isn't running for office. It just seemed that way Sunday evening in Kansas City.
The man who succeeded Alan Greenspan fielded questions from a town hall audience — an unprecedented event in the nearly 100-year history of the Fed.
And Bernanke made his appeal directly to the public. He said the Fed made a mistake in recognizing problems in subprime mortgage lending too late. He also vowed he wouldn't be Fed chairman over a second Great Depression.
“I’m answerable to the American people,” he told the 190 area residents at the invitation-only event.
Many more will hear those words.
The public television program "NewsHour" hosted the hourlong event and will broadcast it in three 20-minute segments starting with tonight's broadcast.
Bernanke took part in the forum to explain the Fed’s actions and to address economic concerns. But he also made the session personal.
Recalling that his academic career had focused on the causes and effects of the Great Depression, Bernanke said he hadn’t expected it to be so useful.
The nation’s central banker said he learned from the Fed’s mistakes in the 1930s, chiefly its failure to take innovative steps in the face of crisis.
Bernanke’s Fed has slashed interest rates to zero, ushered in waves of new programs and helped bail out insurance giant American International Group and Bear Stearns as part of an all-out effort.
The Fed would have saved Lehman Brothers for the same reason, he said, but it did not have the tools it needed.
Bernanke said he stepped in not to save big companies or stockholders, but to prevent the damage he knew the failures would have had on the economy and average Americans.
“I was not going to be the Federal Reserve chairman who presided over the second Great Depression. I had to hold my nose and stop those firms from failing. I’m as disgusted about it as you are,” he told one audience member.
Bernanke called on Congress to create a new way to handle such large failures so they won’t be as disruptive in the future.
He also admitted a mistake.
The Fed, he said, was late to recognize the perils of the subprime mortgage boom that has left many homeowners in foreclosure.
Bernanke also seemed to step back from earlier opposition to a new federal consumer protection agency proposed by the White House.
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