By Agency Reporter

Wednesday, 16 Feb 2011

Federal Reserve Chairman Ben S. Bernanke, in a confidential talk with the commission probing the causes of the financial crisis, said he would defend to his “deathbed” his actions prior to the bankruptcy of Lehman Brothers Holdings Incorporated.

According to Bloomberg News on Tuesday, he said, “I will maintain to my deathbed, that we made every effort to save Lehman, but we were just unable to do so because of a lack of legal authority,” Bernanke said, referring to the 2008 failure that intensified a crisis that Bernanke said was the worst in history, according to an 89-page transcript of the interview by the Financial Crisis Inquiry Commission.

The record of the session, made public yesterday, shows Bernanke using less-guarded language than his speeches and testimony as he answers questions from panel members. In accounts that are similar in substance to his public statements, he says Germany’s labor system is “less efficient” than the United States’, talks about the “blogosphere” and tosses out a reference to the 1968 disaster-novel “Airport.”

Bernanke, 57, defended the Fed’s supervision of individual banks while saying the central bank was “to some extent, culpable” for not regulating subprime mortgages.

“The Fed didn’t do a perfect job, but a lots of things that we see now that can improve and are improving,” he said. “But I don’t think we were particularly culpable on the supervision part relative to the rest of the world.”

Parts of the interview were quoted in the panel’s final report, which cites the November 17, 2009, “closed-door” session in 11 footnotes. The Fed chief discussed topics including the central bank’s failures and why the government rescued Bear Stearns Companies while letting Lehman go bankrupt.

The FCIC’s meeting with Bernanke lasted 90 minutes and was held at the commission’s eighth-floor office near the White House, according to Bernanke’s daybook from the Fed.

Source: Punch