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Bernanke defends bail-out package Bernanke defends bail-out package
(about 23 hours later)
Ben Bernanke, the boss of the US central bank, has defended the US bail-out plan citing his fears of a second Great Depression, during a public talk.Ben Bernanke, the boss of the US central bank, has defended the US bail-out plan citing his fears of a second Great Depression, during a public talk.
"I was not going to be the Federal Reserve chairman who presided over the second Great Depression", he said at an event in Kansas. "I was not going to be the Federal Reserve chairman who presided over the second Great Depression", he said at an event in Kansas City, Missouri.
Helping finance firms as part of the $700bn (£424bn) stimulus plan had benefitted the wider economy, he said.Helping finance firms as part of the $700bn (£424bn) stimulus plan had benefitted the wider economy, he said.
He added that more regulation was needed so no firm was too big to fail.He added that more regulation was needed so no firm was too big to fail.
I had to hold my nose and stop those firms from failing. I am as disgusted about it as you are Ben BernankeI had to hold my nose and stop those firms from failing. I am as disgusted about it as you are Ben Bernanke
"Too big to fail is a terrible situation and we've got to fix that," said Mr Bernanke during the town hall event."Too big to fail is a terrible situation and we've got to fix that," said Mr Bernanke during the town hall event.
"I think that's the top priority for politicians going forward.""I think that's the top priority for politicians going forward."
He said more laws were needed to permit government to wind down failing "financial behemoths" in a transparent manner, to prevent "damage throughout the system".He said more laws were needed to permit government to wind down failing "financial behemoths" in a transparent manner, to prevent "damage throughout the system".
'Fiscal sanity''Fiscal sanity'
The central bank in conjunction with the the US Treasury, organised a $700bn bank bail-out plan in last October, and has since spent around $3 trillion to boost the credit markets and mitigate the downturn.The central bank in conjunction with the the US Treasury, organised a $700bn bank bail-out plan in last October, and has since spent around $3 trillion to boost the credit markets and mitigate the downturn.
The government's intervention in rescuing and providing state aid, for insurance giant AIG among others, has come under criticism from those who say no firm should be too large to fail.The government's intervention in rescuing and providing state aid, for insurance giant AIG among others, has come under criticism from those who say no firm should be too large to fail.
"I had to hold my nose and stop those firms from failing. I am as disgusted about it as you are," said Mr Bernanke."I had to hold my nose and stop those firms from failing. I am as disgusted about it as you are," said Mr Bernanke.
While most of what Mr Bernanke said has been said before, it is unusual for a Fed chairman to have such direct contact with the public, allowing for questions from ordinary Americans.While most of what Mr Bernanke said has been said before, it is unusual for a Fed chairman to have such direct contact with the public, allowing for questions from ordinary Americans.
Looking ahead he said he expected inflation to remain low for some time, but that once the economy improved it would be crucial for the Fed to raise interest rates.Looking ahead he said he expected inflation to remain low for some time, but that once the economy improved it would be crucial for the Fed to raise interest rates.
He also said while the deficit was likely to remain high "it is very important for the Congress and the administration to develop a plan, to say, "Here is how we're going to get back to fiscal sanity".He also said while the deficit was likely to remain high "it is very important for the Congress and the administration to develop a plan, to say, "Here is how we're going to get back to fiscal sanity".