Federal Reserve Chairman Ben Bernanke boasted about the improvements new regulations have provided to the old structure in a speech at Princeton University yesterday.”First, the recent reform legislation has improved the design of the regulatory framework, closing important gaps such as the lack of oversight of the shadow banking system,” he said.
Bernanke also felt the private sector had stepped up to the challenge of the financial crisis, and reformed many of its less than perfect practices.
“Likewise, in the private sector, firms have taken significant steps to improve their systems for managing risk and liquidity,” he said.
When Bernanke took questions from the audience, he was asked how Social Security would reform over the generations.
“U.S. debt will become unsustainable in the next few decades…we have to do something about entitlements,” he said.
Those nearing retirement are not to fear though, as he reassured the audience that any changes would not affect those who haven’t planned for it.
Another question pressured Bernanke on why the Fed is seemingly more optimistic than many surveys and market predictors.
“I don’t think that’s true”, Bernanke said. “We are pretty comparable to private sector predictions”.
Bernanke’s speech was part of a daylong conference celebrating the 10th anniversary of the University’s Bendheim centre for Finance, which Bernanke helped to establish. Many notable Princeton alum were in attendance, including John C. Bogel, the founder and former CEO of The Vanguard Group.