Ben Bernanke has finally answered a question that’s been repeatedly asked by millions since 2008 financial crisis – “Should somebody have gone to jail?”. It was a simple and straight forward question which even Bernanke had tried his best to run away for the last 7 years, until today.

 

“Yeah, I think so” – was the answer from the former chairman of the Federal Reserve when Susan Page asks him the question during an interview with USA Today. If this is an indicator to his upcoming memoir – The Courage to Act: A Memoir of a Crisis and its Aftermath – don’t expect him to sing songs of praise about Wall Street bankers.

Although Bernanke has now acknowledged that more bankers and corporate executives who helped cause the 2008 financial crisis should be in jail, many believed, or at least perceived that being the ringleader, Bernanke should be the first one to be put into prison, with the keys thrown away.

 

However, Bernanke says the Fed didn’t have the power to jail anyone. Conveniently, he says the fault lies with the Justice Department. Hmm, why on earth such script sounds so familiar? Oh yes, the Governor of Bank Negara of Malaysia (Central Bank) Zeti Akhtar Aziz had said the same thing about Prime Minister Najib Razak’s US$700 million money laundering allegations.

Of course, Bernanke was unfairly trying to push all the responsibilities to someone else. He could at least have had his regulators spent more investigation time and resources on the misdeeds of individuals, and then used that evidence to pressure the Department of Justice to act. But Ben didn’t do anything at all.

 

Ben was fast in defending the extraordinary bailout under his chairmanship, arguing that “there was a reasonably good chance that, barring stabilization of the financial system, that we could have gone into a 1930s-style depression … The panic that hit us was enormous – I think the worst in U.S. history.”

About critics who argue the government could and should have done more to rescue Lehman Brothers from bankruptcy, Bernanke explains that the Fed were out of bullets so it couldn’t be rescued. However, he admits Federal Reserve analysts were slow (or rather incompetent?) to realize just how serious the economic downturn would become.

 

Bernanke and the Wall Street bankers’ screw up have been well documented in a 2011 HBO movie – Too Big To Fail – to which 74th and 75th US Treasury Secretary, Henry Paulson and Tim Geithner, were accused as individuals who contributed to the collapse of the US financial markets because they were too incompetent and “out of loop”.

Like it or not, the root of the problem with the 2008 financial crisis is still there – alive and kicking. As long as the US authorities refuse to take action against the rich and powerful individual, the same set of people ranging from bankers, lawyers, accountants, regulators, politicians, will repeatedly scam the US financial markets and scream for taxpayer’s bailouts.

 

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October 5th, 2015 by financetwitter

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