Why the Fed will struggle to respond to the next crisis

Quelling fear and dread will be harder for the Fed when the next crisis hits. Bloomberg

Jonathan Schlefer

Aug 28, 2019 – 11.10am

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As the United States weighs concern about another recession, it is worth remembering how three US financial regulators helped keep the 2007 to 2009 financial crisis from becoming another Great Depression: Ben Bernanke, the chair of the Federal Reserve; Henry Paulson, the treasury secretary as the crisis erupted under President George W Bush; and Timothy Geithner, the president of the New York Fed under Bush and treasury secretary under President Barack Obama.

It is also worth reflecting on one critical decision: letting the investment bank Lehman Brothers collapse on Monday, September 15, 2008. They didn’t have to. And if they hadn’t, they might well have prevented the worst of the crisis in the first place.

Foreign Policy