Ben Bernanke Quotes

For market discipline to constrain risk effectively, financial institutions must be allowed to fail. Under optimal financial regulatory and financial system infrastructures, such a failure would not threaten the overall system.

In the future, financial firms of any type whose failure would pose a systemic risk must accept especially close regulatory scrutiny of their risk-taking.

Fannie Mae may have conformed to the rules but the rules didn’t conform to reality. A major bank or financial institution could meet every single regulatory requirement yet still be at the risk of collapse.

With government deregulation and the triumph of financial liberalization, the dangers of systemic risks, the possibility of a financial tsunami, sharply increased.

The banks, because of mismanagement, because of huge risk taking, are now in very vulnerable positions. We can expect that we're gonna have to do more to shore up the financial system. We also are gonna have to make sure that we set up financial regulations so that not only does this never happen again, but you start having some sort of - trust in how the credit markets work again.

Regulation is necessary, particularly in a sector, like the banking sector, which exposes countries and people to a risk.

There is no evidence that more regulation makes things better. The most highly regulated industry in America is commercial banking, and that didn't save those institutions from making terrible decisions.

But our system of regulation must keep up with this. If it fails to keep up, it will hold back economic expansion. We need financial market regulation that works at national and European level.

The financial system is drifting back to business as usual a bit to quickly …. We are starting to see risky behavior of the sort that people were scared of after the crises

Global banking’s current structure generates an unjust distribution of risks, where losses are socialized.

I think people have to be very careful with new ideas [in fiancé and economics]. What you need to worry about is when you have something that’s a really good idea, but you get too much of it too fast, like over-the-counter derivatives.

It is not my belief that we need greater government regulation of hedge funds with respect to the systemic risk they create.

What we have to find is the right level of regulation of our financial system so that it has the incentive to invest in things, but at the same time, it is sufficiently regulated so it can't get in the kind of trouble that we have seen in the past and we have seen recently.

Large financial institutions in this country will always play a role that is essential to our economic growth. But they must only be permitted to grow and interconnect, throughout our economy, under careful oversight and with a mechanism for allowing those connections to be broken safely.

Regulations don't solve things. Supervision solves things. If we could figure out that the subprime thing was a train wreck that was coming, where were the regulators?

Without a doubt, we do support a robust framework for aggregate capital and liquidity and stress-testing.

Limiting the destructive risk-taking by large financial firms and banks which are 'too big to fail' is needed.

Financial regulators should be particularly attentive to the financial consequences of their actions.

I think we're fooling ourselves if we think that regulators are going to be able to outsmart the bankers. So, the task of designing regulatory reform is trying to make more or less foolproof regulation and that's one of the advantages of the systemic category.

We now have power under the Dodd-Frank legislation to break up banks. And I've said I will use that power if they pose a systemic risk.

In the case of a meltdown, the regulatory authorities may find themselves obliged to step in to preserve the integrity of the system. It is in that light that the authorities have both a right and an obligation to supervise and regulate derivative instruments.

In engineering, people have a big margin of safety. But in the financial world, people don't give a damn about safety. They let it balloon and balloon and balloon. It's aided by false accounting.

I bet Richard Fuld doesn't have an ounce of contrition. It's just megalomania. When it's like that, you need rules to prevent catastrophe. When banks are borrowing the government's credit rating, you need rules to prevent stupid things.

Hedge funds are a very efficient way of managing money. But there are clearly some risks. Hedge funds use credit and credit is a source of instability. Transactions involving credit should be regulated.

We have parts of our system which are overwhelmed by regulation. It wasn't the absence of regulation that was the problem. It was despite the presence of regulation you got huge risks built up.