JACKSON, Wyo. — One year into the financial crisis, central bankers and scholars at the Federal Reserve’s annual retreat last weekend couldn’t agree on how to prevent a repeat.
Fed Chairman Ben Bernanke, his European counterpart Jean-Claude Trichet, former officials and economists meeting here split over whether central banks should be made responsible for financial stability and how closely to heed the concerns of Wall Street.
“We shouldn’t delude ourselves into thinking we are going to build a panic-proof system,” former Fed Vice Chairman Alan Blinder, who attended the conference, said in an interview with Bloomberg Television. “But there are choices between less and more panics, more virulent ones, less virulent ones, and that is the way we want to push the system.”
At stake is the shape of financial regulation as new laws are drafted in response to the crisis, which stemmed from a collapse in U.S. mortgage bonds and has sparked more than $500 billion in losses and writedowns.
Too many new rules may hobble financial innovation, while a hands-off approach could create more bubbles after a series of asset-price busts over the past decade.
