Federal Reserve Chairman Ben Bernanke took on critics from both the right and left Wednesday, using a rare press conference to defend the central bank’s efforts to boost the economy.
Bernanke pushed back against critiques by GOP lawmakers and presidential candidates on one side and Wall Street protesters on the other, mounting a broad defense of the Fed’s recent moves even as the central bank lowered its expectations for the economy going forward.
“Politics is politics and the Federal Reserve tries to stay nonpartisan,” he said. “Our job is to do the best we can for the economy.”
Bernanke was asked about prevalent Fed critiques emerging at protests tied to the Occupy Wall Street movement. While he expressed sympathy with frustrations about the economy, he said many of the complaints levied at the Fed — including those made against the steps it took during the financial crisis — are misguided.
“The concerns about the Fed are based on misconceptions,” he said. “A very simplistic interpretation of that [criticism] was that we were doing that because we wanted to preserve banker salaries. That was obviously not the case.”
If the Fed hadn’t stepped in, things would have been much worse, Bernanke said.
“The consequences would have been dire,” he said. “Not everyone understands that, and so sometimes people misunderstand our motives.”
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One Response
He has very little discretion and really not much power. He is legally required to keep the banking system functioning, make sure the Treasury can sell its bond to finance the national debt, promote full employment and prevent inflation. The Congress together with the President have all the discretion in the matter, and the Federal Reserve just has to react to them, e.g., if the Congress spends more money than it is taking in, the Treasury has to issue bonds to cover the difference, and the Fed has to make sure those bonds have a market. No discretion for the Fed.