Entries in Ben Bernanke (61)


Bernanke Wants to Keep Fed's Stimulus Plan Going 

Alex Wong/Getty Images(WASHINGTON) -- The head of the nation's central bank told D.C. lawmakers Wednesday that he's leaving well enough alone so as not to derail the slow but steady economic recovery.

Appearing before a congressional Joint Economic Committee, Federal Reserve chairman Ben Bernanke declared that the economy is in better shape than it was at this time in 2012.

The Fed has kept interest rates at record low levels since December 2008 and Bernanke warned that raising them now could lead to slowing or ending the economic recovery and causing inflation to fall further.

Deflation might stall the economic recovery by driving down prices so low that businesses are unable to make a profit, forcing them to start laying off workers.

Speaking of unemployment, which stands at around 7.5 percent, Bernanke said it was important to keep seeing improvements in this area, especially since as many as eight million Americans, who have jobs, are only working part-time.

He maintained the Fed has no plans to stop buying $85 billion a month in mortgage-backed securities and Treasury bonds, a process that lowers long-term interest rates, including mortgage rates, which has stimulated a revival in the housing market.

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Bernanke on Sequester Cuts: Too Much, Too Soon

Alex Wong/Getty Images(WASHINGTON) -- The chairman of the Federal Reserve says if lawmakers can’t reach a deficit reduction deal by Friday the resulting mandatory budget cuts known as “the sequester” could become a case of too much, too soon for the fragile economic recovery.

“Congress and the administration should consider replacing the sharp, front loaded spending cuts required by the sequestration with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run,” Ben Bernanke said Tuesday. “Such an approach could lessen the near-term fiscal headwinds facing the recovery while more effectively addressing the longer-term imbalances in the federal budget.”

Testifying before the Senate Banking Committee, Bernanke cited the non-partisan Congressional Budget Office’s estimates that should the budget cuts take effect without hindrance, GDP growth would be curbed 0.6 percent by the end of the year. The Fed chair dismissed the suggestion by some members of Congress to allow the sequester to pass while redistributing cuts among individual programs and departments.

“I think the near-term effect on growth would not be substantially different if you did it that way,” he said, adding that any programs selected by lawmakers to avoid or go under the budget knife would likely be politically driven.

His appearance before the committee was part of a semi-annual report required of his agency to Congress, where he stated existing law is expected to narrow the share of the deficit to GDP from 7 to 2.5 percent by 2015.

Bernanke also addressed concerns over the ongoing government policy to keep short term interest rates for borrowers at a record low. Bernanke stated the low costs were vital to growing the economy and would continue, but acknowledged the future risk.

“Very low interest rates, if maintained for a considerable time, could impair financial stability,” he said. “For example, portfolio managers dissatisfied with low returns may ‘reach for yield’ by taking on more credit risk, duration risk, or leverage. On the other hand, some risk-taking -- such as when an entrepreneur takes out a loan to start a new business or an existing firm expands capacity -- is a necessary element of a healthy economic recovery.”

Low long-term rates had led to increased spending on durable goods such as automobiles and the housing market, he said.

One slightly testy exchange resulted from the otherwise subdued hearing when the Fed chair was questioned by lawmakers of both parties over the Fed’s perceived slow progress eliminating the concept of banks that were “too big to fail.”

Sen. Elizabeth Warren, D-Mass., cited a recent Bloomberg study that suggested large lenders were receiving an $83 billion “insurance program” in her eyes. The senator said corporations needed to give more of that money back to taxpayers.

“The big banks are getting a terrific break and the little banks are just getting smashed on this, they're not getting a break,” she said.

Bernanke is expected to face the House Financial Services Committee on Wednesday.

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Bernanke Defends Fed's Stimulus Measures 

Mark Wilson/Getty Images(NEW YORK) -- Federal Reserve chairman Ben Bernanke says the bank's stimulus measures have helped the global economy, in spite of criticism from abroad, the BBC reports.

Brazil has criticized the United States for keeping interest rates low and weakening the dollar, saying that such measures has hurt emerging economies. Christine Lagarde, chief of the International Monetary Fund, also warned Sunday of asset bubbles consequently developing in emerging nations. But Bernanke defended the Fed's actions by saying the moves have boosted the global economy, the BBC says.

The Fed has kept a low interest rate policy for several years, pumping over $2 trillion into the national economy to encourage growth, according to the BBC.

Copyright 2012 ABC News Radio


Bernanke Says Fed May Boost Economy

Mark Wilson/Getty Images)(NEW YORK) -- Chairman Ben Bernanke defended the Federal Reserve’s past stimulus actions in a speech on Friday morning, saying its actions “can be effective” and more of them may be on the way.

Bernanke’s keynote speech at the Federal Reserve of Kansas City’s Economic Symposium in Jackson Hole, Wyo. was closely watched by investors for clues of additional stimulus in the form of quantitative easing, which at its simplest level aims to increase the monetary supply after the central bank buys government securities.

Though Bernanke did not announce any new Federal Reserve policies or strategies, he made clear the central bank would be open to additional action in the future.

With interest rates, in particular the federal funds rate, near zero, many critics of the Federal Reserve say there is little it can do to further stimulate the economy.

“The key with Fed policy right now lies in preventing deflation, but the markets have already backed Bernanke into a corner, in that not executing QE3 will increase deflationary risk,” said Guy LeBas, chief fixed income strategist with Janney Capital Markets.

In his speech, however, Bernanke said, “a balanced reading of the evidence supports the conclusion that central bank securities purchases have provided meaningful support to the economic recovery while mitigating deflationary risks.”

Bernanke also looked back at the financial crisis, saying, “Now, with several years of experience with nontraditional policies both in the United States and in other advanced economies, we know more about how such policies work.”

Bernanke said without the policies of the Fed, “the 2007-09 recession would have been deeper and the current recovery would have been slower than has actually occurred.”

Whether or not investors were pleased with his speech, the markets seemed to respond positively.

The Dow Jones Industrial Average rose 0.46 percent to 13,060 in mid-day trading. The Nasdaq was up 0.3 percent to 3,058 and the S&P 500 was up 0.29 percent to 1,403.

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Fed Hints More Action Coming in the Near Future

Mark Wilson/Getty Images(WASHINGTON) -- The financial world has Aug. 31 circled on its calendar as the day the Federal Reserve might finally get around to announcing more action in an effort to jumpstart the still foundering economy.

The tip-off came Wednesday as minutes from the Federal Open Market Committee stated, "Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery."

Federal Reserve Chairman Ben Bernanke is scheduled to speak a week from Friday at an economic summit in Wyoming.  It's a speech that could reveal what the nation's central bank has in mind for its September meeting.

If the Fed does make a move, it'll likely be a third round of bond buying -- called quantitative easing -- which would help to stimulate the economy.

Bernanke and the Fed have held off for now, hoping that record-low interest rates would spur banks to lend more.  But that hasn't really been the case.

Meanwhile, Republicans on Capitol Hill want the Fed not to do anything more until at least after November because of the repercussions action might have on the volatile election season.

Copyright 2012 ABC News Radio


Bernanke Says Europe Needs Its Own Fed

Chip Somodevilla/Getty Images(WASHINGTON) -- Federal Reserve Chairman Ben Bernanke says that a central economic organization in Europe would help solve some of that continent’s economic crises.

“If Europe had a single fiscal authority, that would put them in a much closer situation relative to the United States,” Bernanke said Tuesday. “That would probably address many of the concerns, many of the problems that they had.”

European leaders promised this summer the creation of such an organization, but even optimistic outlooks say its creation could take months or years. Even then, critics fear that like many European Union organizations it may not have the teeth to police its member states.

Speaking during a townhall to public educators in Washington, D.C., Bernanke admitted “getting to that point is very difficult.”

“You have 17 different countries,” he said. “Each set of taxpayers want to make sure that their own country is being fairly treated.”

Turning his attention to the future, the Fed chairman also said newer regulatory measures including the Dodd-Frank Act and the Basel, Switzerland, accords were needed to prevent crises over the horizon.

The Dodd-Frank bill imposed new financial regulations on the nation’s financial services industry intended to prevent another massive bailout. The Basel Accords are an international agreement on standardized risk  based capital requirements for banks.

Bernanke credited Dodd-Frank with providing shared infrastructure across U.S. government agencies to “to take steps to provide a warning” against possible downturns.

At the international scale, Bernanke extolled the Basel accords for mandating increased reserve capital requirements across the largest banks. The measure, he said, was designed to make the financial system “as resilient as possible” by giving banks a larger cushion with which to sustain losses.

On Capitol Hill Tuesday, some lawmakers are saying Basel didn’t go far enough. Bloomberg News reports Sens. David Vitter, R-La., and Sherrod Brown D-Ohio, have asked the Fed to implement a surcharge with Basel, “significant enough to change the incentives for the largest banks.”

Copyright 2012 ABC News Radio


Ben Bernanke: Same Economic Analysis, Different Day

Chip Somodevilla/Getty Images(WASHINGTON) -- The appearance by Federal Reserve Chairman Ben Bernanke Wednesday before the House Financial Services Committee went pretty much the same as Tuesday's testimony before a Senate panel.

Bernanke didn't deviate from his contention that high unemployment is keeping the economy from expanding and that the Fed might take some action, but he again wasn't specific about what steps might be taken or when they might happen.

Just like Tuesday, Bernanke also raised red flags that the economy was headed towards a "fiscal cliff" if Congress doesn't move to extend Bush-era tax breaks and stop drastic spending reductions.

Otherwise, the Fed chief said another recession was possible, throwing even more Americans out of work.

About the only difference during Wednesday's appearance was Texas Congressman Ron Paul again pushing a bill that would allow Congress to audit the Fed's monetary policy decisions, an action that Bernanke described as a "nightmare scenario."

He noted, "There's a lot of evidence that an independent central bank that makes decisions based strictly on economic considerations and not based on political pressure will deliver lower inflation and better economic results in the longer term."

Paul has long called for eliminating the Fed, alleging, "Trillions and trillions of dollars (are) being printed out of thin air."

Copyright 2012 ABC News Radio


Ben Bernanke Warns Congress on ‘Taxmageddon’

Chip Somodevilla/Getty Images(WASHINGTON) -- Federal Reserve Chairman Ben Bernanke warned Capitol Hill today that any modest gains the economy is making could all be lost if Congress doesn’t take action to avert the so-called “taxmageddon” by the end of the year.

“As is well known, U.S. fiscal policies are on an unsustainable path,” Bernanke told the Senate Banking Committee. “The most effective way that the Congress could help to support the economy right now would be to work to address the nation’s fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery.”

Congress is facing a year-end “fiscal cliff,” the intersection of several tax provisions — notably, the expiration of Bush-era tax cuts, $1.2 trillion in automatic spending cuts because of the sequester and expiring payroll tax breaks, which, if not addressed, could cost American taxpayers $310 billion in tax increases next year.

“Recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken,” Bernanke said.

But as leadership from both sides of the aisle continue to wage an increasingly polarized battle over taxes, Sen. Chuck Schumer, D-N.Y., today urged the Federal Reserve on measures to take economic recovery into its own hands.

“The bottom line is very simple: We’re not going to get the fiscal relief we want, at least over the next short while,” Schumer said. “Given the political realities, Mr. Chairman, particularly in this election year, I’m afraid the Fed is the only game in town.”

Bernanke testified on Capitol Hill to deliver his semiannual report, painting a picture of slowing job growth, tepid manufacturing rates and weakened progress on the housing market in the second-quarter of 2012. The U.S. economy has continued to recover, he said, but growth indicators are moving at a pace that he called “disappointing.”

While the unemployment rate has fallen about a percentage point since late 2011, average growth in payroll employment has dwindled to 75,000 per month, down from 200,000 then. Bernanke said jobs related to the warm weather last winter might be to blame for some — but not all — of the languid jobs momentum.

The housing sector is seeing “moderate” growth, he said, with construction and home sales gradually increasing, thanks to unprecedentedly low mortgage rates. But factors like tough lending standards for would-be buyers, plus an abundance of vacant or foreclosed homes, continues to hamper growth.

Bernanke projected unemployment rates would remain at 7 percent or higher until the end of 2014, with the GDP growing at a lower-than-expected pace of 2.2 to 2.8 percent in the next year.

He indicated the Federal Reserve is willing to take action to avert a second financial crisis but would not elaborate on possible plans or a timeline for implementation.

“We will evaluate our options going forward,” he said, adding that it’s important to weigh the costs and risks associated with some non-conventional measures to spur economic growth. “If we are not getting sustainable improvements, we’ll have to seriously consider taking additional action.”

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Copyright 2012 ABC News Radio


Ben Bernanke to Testify Before Congress on Economy

Andrew Harrer/Bloomberg via Getty Images(WASHINGTON) -- Americans can expect to see some political theater on Tuesday when Ben Bernanke testifies before members of the Senate Banking Committee. 

The Federal Reserve Board Chairman is set to deliver his view of the slowing economic growth. 

Democratic Sen. Charles Schumer of New York is expected to press Bernanke to take more steps to jolt the economy.  Other Democrats may join in the chorus, while Republicans are highly skeptical about further moves.

Investors are hoping Bernanke will hint that more bond purchases are on the horizon.  In the past, the purchases have led to boosts in the stock market.

Copyright 2012 ABC News Radio


Bernanke Warns Congress on 'Taxmaggedon'

Alex Wong/Getty Images(WASHINGTON) -- The Federal Reserve Board chairman had a stern warning Thursday for Congress: “taxmaggedon” is real, it’s coming and only lawmakers can save the nation from falling off this rapidly approaching “fiscal cliff.”

“What is particularly striking here is that this is all pre-programmed,” Fed Chairman Ben Bernanke said. “If you all go on vacation, it's still going to happen, so it's important to be thinking about that and working with your colleagues to see how you might address that concern at the appropriate time.”

Bernanke, speaking in front of the Joint Economic Committee, was referring to the so-called “taxmaggedon,” the year-end intersection of the expiration of the Bush-era tax cuts, the $1.2 trillion spending cuts due to the sequester, and expiring payroll tax breaks which, if not addressed, could cost American taxpayers $310 billion in tax increases next year.

“The so-called fiscal cliff would, if allowed to occur, pose a significant threat to the recovery,” Bernanke warned. “If no action were taken and the fiscal cliff were to kick in in its full size, I think it would be very likely that the economy would begin to contract, or possibly go even into recession and that unemployment would begin to rise.”

Bernanke said that in the short term if all the measures would occur together they would amount to a withdrawal of spending and increasing in taxation between 3-5 percent of GDP, which would have a “very significant impact” on the near-term recovery.

“What I'm saying is that, in ways that are up to Congress, steps should be taken to mitigate that overall impact. And what combination of tax reductions and spending increases -- that's really up to you,” Bernanke said, “but I urge Congress to come to agreement on that well in advance so as not to push us to the 12th hour. But again, I think that trying to put our fiscal situation on a sustainable basis is perhaps one of the most important things that Congress can be working on.”

The single biggest item in the fiscal cliff, Bernanke said, is the potential expiration of the so-called Bush tax cuts.  If everything else were held constant, he said that expirations alone would have adverse effects on spending and growth in the economy that would be significant.

“I'm not necessarily saying that the right thing to do is to extend those cuts,” he added. “It could be there are other steps you could take that would have a similar impact. But that is the single biggest component of the so-called cliff.

Rep. Sean Duffy, R-Wisc., asked if this means that the Fed chairman would advise that the tax cuts should be extended.

“I'd tell you to try to avoid a situation in which you have a massive cut in spending and increase in taxes all hitting at one moment, as opposed to trying to spread them out over time in some way that will give less -- create less short-term drag on the U.S. economy,” Bernanke responded.

Beyond Congress’ end of the year to-do list to avoid the potentially devastating effects of “taxmageddon,” Bernanke said the Federal Reserve is prepared to take steps to help the U.S. economy, but refused to be pinned down on what additional steps can be taken to spur growth and did not signal imminent action.

As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate," Bernanke said.

Copyright 2012 ABC News Radio

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