Bernanke: Financial-crisis lessons

Who’s responsible for the financial crisis that led to the Great Recession? There is plenty of blame to go around, Ben Bernanke, chairman of the Federal Reserve and former chairman of Princeton’s economics department, told a capacity crowd at Richardson Auditorium Sept. 24.  

Part of the problem was the private sector’s failure to manage risk, Bernanke said, but regulatory systems also “placed insufficient emphasis on the detection of systemic risks.”  

Much of the systemic risk in the 2008 financial crisis originated with the “too-big-to-fail” banks, Bernanke said. To safeguard stability and restore market discipline, he said, those firms must believe that the government will not step in to bail them out, and the key is creating a framework where institutions can fail without widespread collateral damage.