The financial crisis stemmed from fundamental breakdowns in both markets and regulation, Federal Reserve Chairman Ben Bernanke said Friday, highlighting the importance of pressing forward with an important overhaul of banking regulations.
The stability of the financial system is even more important in the current environment of super-low interest rates, Bernanke said at an event in New York held by two research organizations, the Russell Sage Foundation and the Century Foundation.
"Going forward, particularly in situations where interest rates are low for a period, as they are today, we must be particularly attentive to systemic stability and make sure there's nothing happening that gives us pause," Bernanke said.
Echoing points he has made in a number of previous addresses, Bernanke defended the Fed's actions taken to mend markets and the economy during the financial meltdown and worked to explain why the crisis caused so much damage relative to other financial implosions.
"Dependence on short-term funding, high leverage, and inadequate risk management were critical vulnerabilities of the private sector prior to the crisis," Bernanke said, listing the failures in the private sector.
Financial firms' inadequate risk controls magnified the problems associated with the housing and mortgage markets' slump, he said. When home prices started to slide, losses were concentrated at "key nodes" in the financial system, including highly leveraged banks and broker dealers.
Contrasting the aftermaths of the popping of the technology stock bubble at the start of the last decade and the recent financial crisis, Bernanke said the two episodes differed because "the problems in housing and mortgage markets interacted with deeper vulnerabilities in the financial system in ways that the dot-com bust did not."
Bernanke also highlighted the failings of government agencies.
"The public sector also failed to appreciate or sufficiently respond to the building vulnerabilities in the financial system, both because the statutory framework of financial regulation was not well suited to addressing some key vulnerabilities and because some of the authorities that did exist were not used effectively."
Gaps in the regulatory structure before the crisis prevented officials from seeing all of the system's vulnerabilities and gathering enough information, he said. If another asset bubble emerges, changes to monetary policy shouldn't be the first response, he said.
Federal Reserve Chairman Ben Bernanke, financial crisis, financial crisis, Russell Sage Foundation, financial regulation, the financial system, mortgage markets, Bernanke, financial system, vulnerabilities
Hiç yorum yok:
Yorum Gönder