Bernankes out-of-the box thinking during the 2008 financial crisis helped prevent the Great Recession from turning into the second Great Depression. Now, however, the Fed chief faces the delicate task of making sure the recovery lasts well after massive government stimulus fades later this year.
To foster the recovery, Bernanke and other Fed officials have repeatedly pledged to hold interest rates at record lows for an “extended period.” The hope is that low rates will entice people and businesses to spend more, generating enough economic activity to help keep the recovery going.
But Bernanke is likely to warn again that the pace - - - - >

Bernanke, in a speech to the Independent Community Bankers of Americas meeting in Orlando, Fla., argued against a Senate proposal that would scale back the Feds banking duties.
Close connections with community banks give the Fed a better understanding of the nations financial risks, including problems in commercial real-estate and small-business lending, according to Bernankes prepared remarks.
A Senate bill to overhaul financial regulation would strip the Fed of its power to supervise state-chartered banks and bank holding companies with assets of less than $50 billion. That would leave the Fed overseeing only 35 big bank holding companies. The legislation, written by - - - - >

Central bankers are planning to eventually remove $1.43 trillion of housing debt from the balance sheet after critics such as Stanford University economist John Taylor accused them of straying beyond monetary policy. Philadelphia Fed President Charles Plosser said yesterday that the Feds purchases of housing debt expose it to demands from politicians to support other industries.
Some of the Feds emergency actions “blurred the line between monetary policy and fiscal policy, thereby increasing the risk to the Feds independence,” Plosser said in a speech. “These policies have - - - - >

“The best response to the housing bubble would have been regulatory, rather than monetary,” Bernanke said yesterday in remarks to the American Economic Associations annual meeting in Atlanta. The Feds efforts to constrain the bubble were “too late or were insufficient,” which means that regulatory actions “must be better and smarter,” he said.
Bernanke said the Fed is improving supervision of banks and has strengthened measures to protect consumers of financial products. Senate Banking Committee Chairman Christopher Dodd, who backs Bernanke for a second term, has called - - - - >

Fed officials meet for the last time this year Dec. 15-16 after a report last week showing employers cut the fewest jobs in November since the recession began in December 2007. The report prompted some investors to raise bets the Fed would increase rates by the third quarter of 2010.
Treasuries climbed yesterday after Bernanke set back those perceptions, saying the economy faces “formidable headwinds.” He repeated the language of the last Fed statement in November foreseeing an “extended period” of low rates and said inflation might - - - - >

Fed Chairman Ben S. Bernanke made the comments in an Op-Ed piece to appear in Sundays Washington Post, five days before the Senate Banking committee holds a hearing on his nomination for a second term. His current four-year term expires Jan. 31.
Bernanke wrote the nation is challenged to design a financial oversight system that will “embody the lessons of the past two years and provide a robust framework for preventing future crises and the economic damage they cause.”
But two proposals being considered “are very much out of step with the global consensus on the appropriate role of central banks, and - - - - >

The Federal Open Market Committee, at the conclusion tomorrow of a two-day meeting, will probably maintain its assessment that “tight” bank credit is impeding growth. Lending contracted for five straight weeks through Sept. 9, a drop that in part reflects Fed orders to banks to raise more capital and toughen lending standards, analysts say.
A failure to restore the flow of bank credit carries the risk that the economic recovery will be slower than the Fed anticipates, or even that the U.S. lapses into another recession, economists - - - - >

Federal Reserve Chairman Ben S. Bernanke used a weekend Fed symposium to single out the creation of rules limiting risk as one of the “difficult challenges” ahead. European Central Bank President Jean-Claude Trichet said “green shoots” arent enough for him to declare the recovery sustainable and cautioned that officials must do “an enormous amount of work.”
Bernanke and Trichet renewed their push for changes to global finance just four weeks before leaders from the Group of 20 meet in Pittsburgh to discuss efforts to avert future financial - - - - >

Looming in the future is a high-risk challenge for the economys rescuer-in-chief: He will have to mop up that money without disrupting a nascent recovery.
And timing is vital. Act too fast, and Bernanke risks choking off lending to businesses and everyday Americans. Wait too long, and he risks setting off crippling inflation.
“We are in such an unusual situation,” said Lyle Gramley, a Fed member in the early 1980s and now chief economic strategist at Soleil Securities Corp. “The Fed will have a more difficult set of decisions to make.”
Assuming he manages to help usher in a sustained recovery, Bernanke, like - - - - >

Property values have fallen 35 percent since October 2007, according to Moodys Investors Service. Thats making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls and hotels this year, pressuring companies such as Maguire Properties Inc., the largest office landlord in downtown Los Angeles, to put buildings up for sale.
The industry is likely to be high on the agenda when Bernanke and his colleagues sit down in Washington tomorrow for the Federal Open Market Committee meeting on monetary policy. Lawmakers - - - - >