ECONOMIC PERSPECTIVES

In the January 4, 2010 New York Times article " Lax Oversight Caused Crisis, Bernanke Says ," Catherine Rampell reports that the Federal Reserve chairman blames regulatory failure for the economic decline of recent years: ATLANTA — Regulatory failure, not low interest rates, was responsible for the housing bubble and subsequent financial crisis of the last decade, Ben S. Bernanke, the Federal Reserve chairman, said in a speech on Sunday. Mr. Bernanke’s remarks, perhaps his strongest language yet assessing the roots of the financial crisis, came as he awaited confirmation for a second term as Fed chairman and as he sought greater regulatory authority from Congress. “Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates,” Mr. Bernanke said in remarks to the American Economic Association. Mr....

In the January 3, 2010 article " Fed: Regulation 1st defense against speculation ," Associated Press economics writer Jeannine Aversa reports that Federal Reserve Chairman Ben Bernanke argues increased regulation of financial markets is necessary to avoid future economic crises: WASHINGTON – Stronger regulation is the best way to prevent financial speculation from getting out of hand and throwing the economy in a new crisis, Federal Reserve Chairman Ben Bernanke said Sunday. But he didn't rule out higher interest rates to stop new speculative investment bubbles from forming. The Fed chief's remarks were his most extensive on the subject since the housing market's tumble led to the gravest financial crisis since World War II — and perhaps the worst in modern history, in his view. Critics blame the Fed for feeding that speculative boom in housing by holding interest rates too low for too long after the 2001 recession. But Bernanke, in a speech to the American Econom...