While acknowledging that the Federal Reserve was “extremely uncomfortable” about last year’s bailouts of big financial companies, Fed Chairman Ben Bernanke said Friday that the central bank’s strategy to ease the financial crisis is working.
Bernanke was referring to the Fed’s unprecedented decisions last year to step in and financially back JPMorgan Chase’s takeover of then-troubled investment house Bear Stearns and throw its first of four financial lifelines to insurance giant American International Group.
In remarks prepared for a Fed conference in Charlotte, N.C., Bernanke said the central bank was forced to take action because the collapse of those companies would have dealt a serious blow to the financial system and the national economy.
The Fed’s radical programs to bust through the financial crisis and spur bank lending to consumers and businesses are helping. Its program to provide financial companies with loans, buy mounds of debt that companies rely on for short-term financing of payrolls and supplies, and efforts to bolster consumer lending and the mutual funds have eased some credit stresses, he said.
