Federal Reserve Chairman Ben Bernanke sat for an interview with ABC’s Diane Sawyer, and we dug through the transcript for the most important details.
We found these seven points to be the most enlightening:
- Sawyer questioned exactly how long it would take for the U.S. economy to return to full employment. Bernanke neatly side-stepped this one, though said “unless we get faster growth than we’ve been seeing it is probably going to take a while still.” Sawyer pressed further, asking when: three years? five years?, to which Bernanke responded, “I think we’re still sort of in that general vicinity. But it’s very imprecise. I don’t want to convey the sense that we know exactly when– things will be back to– completely to normal.”
- The Fed will impose more regulations on the banks. “We’re gonna be much tougher…We continue to be tougher and we’ll continue to– add– the rules necessary to make sure that they’re– operating in a safe manner, in a way that doesn’t endanger– our economic system. In terms of lending we’ve emphasised to the banks the importance of making loans to– to good borrowers, that’s– that’s the reason the financial system’s so important because– our system lives on credit.”
- Bernanke and his colleagues are pretty annoyed with Congress, though optimistic that the political gridlock could improve at year end: “Well, we have expressed– at the Fed, not just myself and my colleagues have expressed a lot of concern about the long run fiscal sustainability of– our economy and our federal budget. And that’s something that’s gonna take a lot of political courage and– creativity and– and leadership to– to tackle. And– so far it hasn’t really happened. But– you know– at the end of– this year there’s gonna be some big changes in the existing law. The Bush tax cuts will expire, lots of things are gonna happen. And that’ll be a moment where I hope that– Congress and administration will get together and– and make some tough decisions about how to bring our federal budget back to– a more reasonable position.”
- Long-run unemployment is the #1 thing that keeps Bernanke from sleeping at night. “0% of the unemployed have been out of work for more than six months. Those people are obviously facing a lot of hardship– their skills could be eroding– they may never be able to get back into the labour force at the same earnings level or same occupation that they had when they– when they lost their jobs. So I think it’s important for us to support the recovery and help people get back to work.”
- He’s still shaking in his boots about housing, which he said has not yet seen a “full-fledged recovery.” He added, “Normally in a recovery you would see housing growing much more quickly, construction– housing related industries. So far housing is– kinda still pretty flat. We have seen a few signs– of– of progress– a few extra permits for construction. We see more construction in multi-family– housing. More people are moving into apartment buildings for example. So there’s a bit of– a bit of a green shoot there if you– if you will. But– you know, we’re not really yet in a full-fledged housing recovery.”
- Bernanke believes the American dream is still alive, despite the numerous challenges the U.S. faces. “We have a lot of problems. We’ve got education issues, we’ve got health issues, we’ve got– fiscal policy issues. But we had those before the crisis. And I– I think that– our economy’s gonna recover and– and c– and continue to grow and be– a world leader. But we’ve got a lot of challenges, and there’s no– there’s no covering up that fact.”
- Fears that China will overtake the U.S. economy are overblown; the U.S. is still the leader of the world economy. “All of these factors that people point to– about– you know, globalization and off-shoring and all those things, in the first place those things were all working before the– the crisis and we had unemployment that was much lower than we have today. And then– and then secondly, you know– there’s actually been some tendency to reverse off-shoring, to do on-shoring– lot of jobs– that have gone to China are– have actually started to come back. And the U.S. is very competitive, and– so I have some hopes that– you know, that in fact– we’ll see more job growth coming from– changes in where– firms decide to produce.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.