At a town hall meeting in Kansas City, Federal Reserve Chairman Ben Bernanke admitted that the Fed erred in not recognizing early on the potential problems in subprime lending that led to the foreclosed housing problem.
He admitted that the Fed was late in recognizing the risks arising from the subprime lending boom that later caused the avalanche of foreclosed homes across the nation.
Bernanke was answering questions at a forum held at the headquarters of the Kansas City Federal Reserve Bank, which he helped dedicate in June last year.
Bernanke’s Sunday evening forum in Kansas City was the first time in the almost 100 years of the Federal Reserve that a Fed chairman answered questions in a town hall style. A total of 190 residents attended the invitation-only forum.
Primarily, Bernanke attended the event to explain the actions of the Fed and to respond to concerns about the economy. But the Fed chairman also talked about some of his personal experiences.
Bernanke said it was beneficial that his previous academic work focused on the study of the Great Depression. He said one of the Fed’s major mistakes during the 1930s depression was its failure to implement innovative solutions to avert further financial problems and accelerate recovery.
Among the major moves that Bernanke did were cutting interest rates down to zero and helping launch a series of financial programs that helped avert the collapse of the financial system. Record low mortgage rates enabled many buyers to buy foreclosed homes and helped make a dent on the foreclosed housing problem.
He explained that he helped bail out Bear Stearns and American International Group not to save stockholders and big corporations but to prevent the overwhelming damage that their collapse would have inflicted on average Americans and on the entire economy.
He has also urged Congress to craft a new system to deal with big financial failures that could happen again in the future.
Some in the audience observed that Bernanke seemed to go easy on his earlier opposition to the proposed creation of a consumer protection agency that would focus on the welfare of consumers and prevent situations that hammer consumers such as the foreclosed housing problem.
Bernanke told his audience that the U.S. economy would begin to recover by the end of the year but that unemployment would still increase to over 10 percent in 2010.
With the continued rise in unemployment, the foreclosed housing problem will persist, as many analysts have said.
Joseph Smith has been educating buyers on the finer points of Foreclosed at
Foreclosure-Support.com for over five years.
