Fed Chairman Blames Banks For Continued High Unemployment

Federal Reserve Chairman Ben Bernanke on Monday blamed banks for slowing the recovery and keeping unemployment high.

Despite hundreds of billions in dollars in taxpayer bailouts, the nation's banks have dramatically reduced their lending this year.

"Banks' reluctance to lend will limit the ability of some businesses to expand and hire," Bernanke said. "Because smaller businesses account for a significant portion of net employment gains during recoveries, limited credit could hinder job growth."

Bernanke predicted that the unemployment rate will get worse before it gets better. "The best thing we can say about the labor market right now is that it may be getting worse more slowly," Bernanke told several hundred people in suits crowded into a midtown Manhattan hotel ballroom.

"Access to credit remains strained for borrowers who are particularly dependent on banks," Bernanke said. "Bank lending has contracted sharply this year...[and] banks continue to tighten the terms on which they extend credit for most kinds of loans."

Bernanke also touched on "too big to fail." While some, like Rep. Paul Kanjorski (D-Penn.) and Bank of England Governor Mervyn King, have said that big banks should be broken up, Bernanke said in response to a question, that "making banks smaller isn't going to do it."

Former Fed chairman Paul Volcker and former Citigroup chairman and co-CEO John Reed, among others, have advocated for some sort of restoration of the Glass-Steagall act -- the Depression-era law that kept commercial banks and investment banks separate. That, too, would result in the breakup of the biggest banks. But Bernanke said that such a move "would not be constructive."

The assortment of Wall Street bankers and titans who make up the Economic Club of New York listened to Bernanke deliver his speech as they dined on herb-roasted grilled chicken breast in a mushroom cabernet reduction with goat cheese and mesclun greens.

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Comments

[research]

The Bankster Bonuses would have rescued all the "toxic" home loans.

The Banksters have sucked all the money out of the economy, and are gambling with leveraged derivatives still backed by taxpayers.

The Banksters have no interest in un leveraged main street investments.

Outlaw all derivatives and FORCE investment back to Main Street.

Economies always do better WITHOUT DERIVATIVES.

See my profile for details and links.

[hypnotoad72]

The only thing banks did wrong was to set up ARMs and loan obscene amounts of money (at rates they feel they can increase at any time - more ARs) to people making obscenely small wages... if anybody knew that the people would lose their jobs (when not getting a pay cut, rather)... either way, the worker is caught in the middle. The facts, figures, charts, and graphs of the last 40 years -- all of which is instantly obtainable on the web -- speaks VOLUMES. And despite it all, I still feel far more for the banks, believe it or not. In a couple of ways, which I've already alluded to in this post, they're caught in the middle too.

[hypnotoad72]

Wrong.

Corporations hire and fire people. People do a good job, get paid, repay banks and/or save.

Doing good has been superseded with doing "good enough for cheap". The number of problem products and services, regardless of country made, increasingly proves "good enough is too good (for my consumers, but I'm not going to drop costs because my salary is worth it") (even though it isn't - management has to be held accountable, which is why they (used to) claim they deserved higher incomes. What we're seeing proves swindling is universal...).

[dtmfman]

someone please explain to me why both bernake and paulsen aren't on trial for conspiracy to defraud the US Gov?...they passed billions to their banking cronies...and sat back and did nothing to either monitor the money nor did they raise a hand or a finger when billions were given as golden parachutes to the very same people who destroyed our financial system...all with a smile and a wink....something he must have learned from failin...uhh I mean Palin....

[dtmfman]

Huh?....What's this?....B­ernake....­finally grew a pair?...I don't believe it....

[mjtaylor22]

ben i s half way right tarp was issued to keep credit markets fromfreezing, instead the banks took bonuses and stopped lending all together.
great where is the accountability.
2nd
Break up the darn banks, so THAT A BAILOUT IS NO WHERE NEAR NECESSARY OR EVEN THOGHT OF

[Harrier]

Strange, it was my understanding the banks wanted all short term gains and assets associated with their mortgages without having to pay for them. Why is this a surprise to anyone? Why has he not forced financial institutions not to lobby for waiving pursuit of objection of reform... How stupid is it to wait until the financial institutions get as strong as possible. It's the worst possible negotiating strategy and is deliberately done this way as an excuse to perpetuate the same failed system

[WritusMaximus]

Gee, Bernanke thinks that if the government and Fed gave them banksters hundreds of billions of taxpayer money, no strings attached, no questions asked, that them banksters would place conditions on themselves to justify the taxpapayer giveaway, such as banksters having to lend a lot of that money! Yeah, that's right! Ask for nothing in return, and expect something in return! Bernanke, your mind is truly deep! We are in good hands for Bernanke is running the show!

[dart79]

Banks need to lend to printers, printers need to print more money, and people need more leverage. This model has worked under Alan Greenspan and will work under Ben Bernanke. That is why they are called maestro and helicopter.

[MrCreosote]

photo

One surefire solution to SOME of these problems is to INSIST that any further stimulus (which IS needed.. Krugman said right off the bat that the previous attempts were WAY short of the amount needed to make a difference.. & he was RIGHT, as this development proves) contain a NON-NEGOTIABLE proviso to GUARANTEE that ALL jobs created by these funds REMAIN in the UNITED STATES.

Nothing helps the economy if wages & spending is happening in TAIWAN.

I was LIVID at the Obama Administration when I heard that the GM bailout didn't include such guarantees...

NOW, their upcoming $4,000.00 total-electric is being manufactured in PHUCQUING CHINA, ferchrissakes..

[WritusMaximus]

Agree. But that's not the plan. Watch and see, for actions reveal the truth.

[DEXTERMORGAN]

BB predicts that the unempl0yment rate will get w0rse before it gets better. - Well n0 chit Sherl0ck.
He p@ts himself on the b@ld spot a lot but wer the fu-kkk was he when the economy nearly coll@psed?

[aflyinyoursoup]

He was behind the curtain pulling levers, flipping switches and reading dials, to make certain that it did indeed collapse....

[aflyinyoursoup]

Repost:

"Federal Reserve Chairman Ben Bernanke on Monday blamed banks for slowing the recovery and keeping unemployment high."
The Banks"???..... Bennie.....The Banks??? Those darn Banks are doing it all???
That's like pleading innocent to assault and battery charges, thusly:
Well, Your Honor, ah, er, ah. Well her's what happened, Your Honor. It was my index finger that poked my neighbor's eye out, not me. I was actually on vacation in the Bahamas at the time. Yeah, Your Honor, that's the ticket. I rest my case.
Of course the judge and jury, being that maggot-infested dung-heap known as the US Congress will predictably deliver a swift acquittal.
What's actually happening here is the deliberate starvation of small and medium sized businesses, ya know, the ones that don't belong to the 'Big Boy's Club'. The ensuing failure of a large number of these businesses will cause a collapse in the commercial real-estate market.
Guess who will be close by to snatch up these properties for pennies on the dollar???
This is pretty much what happened after the "Bank Engineered Great Depression". And they're about to do it again.
Bennie, Bennie, you guys are plenty slick fellers.

[Davyhulme]

Yes, lets give more money to business! An example might be banks as they were more than willing to loan and hire! I would think that the demand for business loans might be quite low right now for expansion as there is no product demand right now. If I was a business, I might want a loan just to help me survive!

[harpo73]

People Like Krugman were RIGHT.

and dufuses like Bernake were wrong.

BOTTOM LINE

[harpo73]

LISTEN TO Ben BEFORE the meltdown.

http://www.youtube.com/watch?v=HQ79Pt2GNJo&feature=player_embedded

and he is chairman ot the Fed, WHY???????­??????????­??????


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