Bernanke says Fed didn't act quickly enough to stop reckless mortgage lending

But the central bank's chairman defends its role in rescuing giant firms such as insurer AIG, saying that it needed to take steps to stave off an economic collapse.

By Don Lee
LA Times
July 27, 2009

Reporting from Kansas City, Mo. — After taking a pounding in Congress over the economic crisis and the multibillion-dollar bailout of ailing financial firms, Federal Reserve Chairman Ben S. Bernanke went to Middle America to try to explain the central bank's actions and shore up its bruised image.

In his efforts to open a window into the traditionally secretive institution, Bernanke conceded to an assembled audience here Sunday that the Federal Reserve did not act soon enough to stop reckless mortgage lending that fueled the global financial crisis.

But he defended the Fed's part in rescuing giant firms such as insurer American International Group Inc., saying that he was "disgusted" by their reckless behavior but needed to take steps to stave off an economic collapse.

"I was not going to be the Federal Reserve chairman who presided over the second Great Depression," he said firmly in an event to be aired this week on the PBS program "The NewsHour With Jim Lehrer."

(More here.)