Since the Financial Crisis Inquiry Commission released its report yesterday, there's been some interest about a comment Federal Reserve Chairman Ben Bernanke made during a private interview with the commission. He said that 12 of the 13 most important financial institutions were at risk of failure during the crisis. It's important to take this comment into context, and not jump to the wrong conclusion.
First, let's go to the comment itself:
"As a scholar of the Great Depression, I honestly believe that September and October of 2008 was the worst financial crisis in global history, including the Great Depression. If you look at the firms that came under pressure in that period . . . only one . . . was not at serious risk of failure. . . . So out of maybe the 13, 13 of the most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two."
John Carney at CNBC speculates about who these firms might have been, but is right to consider this a fool's errand. Bernanke should just tell us. After all, at this point, they've all pretty much recovered anyway. There's little point for us to try to imagine which of the firms were on this list, and which one might have survived. In fact, who they were doesn't really matter.