Ben Bernanke talks financial crises with the Business School

Bank of England Governor Mark Carney introduces Ben Bernanke

Two of the world's top financial policy makers, Ben Bernanke and Mark Carney, spoke at an Imperial event last night.

Mr Carney, Governor of the Bank of England, introduced Dr Bernanke, who served as Chairman of the Federal Reserve under Presidents George W Bush and Barack Obama from 2006 to 2014 – including during the 2008 global financial crisis. 

The Q&A session was held for the Brevan Howard Centre for Financial Analysis at Imperial College Business School. The discussion was Dr Bernanke’s first event outside the United States since the publication of his new book, The Courage to Act, a memoir of the financial crisis and its aftermath.

In his introduction to the evening, Mr Carney paid tribute to Bernanke’s work as “a leading theorist and, crucially, practitioner” who deserves credit for helping stave off the possibility of another “Great Depression”. 

Mr Carney said, “With Ben at the helm, the Fed acted boldly, bravely, collegiately, with collaboration and innovation.”  

Imperial’s Professor David Miles led the Q&A session with Dr Bernanke, covering everything from the collapse of Lehman Brothers (“We didn’t save Lehman, because we couldn’t”), the challenging nature of his past job (“central banking is a contact sport”), to his level of sympathy for German economic policy (“none whatsoever”). 

Preventing crises

In his new book, Dr Bernanke argues that in 2007 and 2008 the world economy came startlingly close to collapse. It was only government action – led by the Federal Reserve in conjunction with other central banks and governments worldwide – that stopped the crisis from becoming even more catastrophic. 

Ben Bernanke takes questions from Professor David Miles

A key objective of Imperial’s Brevan Howard Centre is to understand and help prevent future financial crises. 

Dr Bernanke admitted to being “a bit jealous of the British system and its ability to get things done” relative to the tougher checks and balances built into the US system. Although he’s clear that he respects the democratic and open nature of the US system, Dr Bernanke said “let’s distinguish between the normal democratic process and what’s happening in the US” with its polarised Congress and ideological extremists on the left and right. 

The former Fed Chair with the current Bank of England Governor

Dr Bernanke recalled one moment at the height of the crisis when the Fed was formulating plans for an enormous bailout of AIG. Both action and inaction contained huge risks to the US and global economy. Senate Majority Leader Harry Reid turned to the Fed Chair and said “Don’t mistake anything anyone has said here as constituting Congressional approval of this action. I want to be completely clear. This is your decision and your responsibility.” Dr Bernanke told the Imperial audience that he felt “hung out to dry. It was a lonely feeling. $85 billion is a lot of money.”

Reflecting on how his life has changed since leaving behind such pressured moments, Dr Bernanke said he is “delighted to be a civilian again. I like looking in the FT and thinking ‘that’s a serious problem, I hope someone deals with it.’”