Bernanke: Signs of Hope Seen For Recession's End

Fed Chairman Ben Bernanke says he sees signs that the recession is easing, though a full recovery will need banks to be stabilized.

In a speech Tuesday, Bernanke says he sees a leveling out of economic activity is the first step toward recovery and asserts the country will not have a sustainable recovery without a stabilization of the financial system and credit markets.

He points to positive signs including recent upticks in home sales and new home construction. He also sees as encouraging the improvements in consumer spending, notably sales of new vehicles.

One area where it is becoming more affordable is the housing market. "Certainly, the housing market remains depressed, but lower interest rates and house prices are making houses more affordable," Bernanke says.

Bernanke also talks about the concerns surrounding whether the dramatic steps the Federal Reserve has taken in the past 18 months to boost liquidity will result in higher rates of inflation in the future. He says the Fed has a number of effective tools that "will allow us to drain excess liquidity and begin to raise rates at the appropriate time," he explained.

He also sees that many of the Fed's special lending programs will almost certainly have to be unwound or scaled back once the nation's economy moves toward recovery.

In his statement, he emphasizes his belief that government support of certain financial services companies, such as insurance giant American International Group (AIG), was required in order to prevent a major financial collapse. Bernanke says if AIG had been allowed to fail, it "could have triggered a 1930s-style global financial and economic meltdown, with catastrophic implications for production, incomes, and jobs."


About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.




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