ben s bernanke : on the outlook for the economy and policy speech by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the economic club of new york, new york, 16 november 2009. * * * when i last spoke at the economic club of new york a little more than a year ago, the financial crisis had just taken a much more virulent turn. in my remarks at that time, i described the extraordinary actions that policymakers around the globe were taking to address the crisis, and i expressed optimism that we had the tools necessary to stabilize the system. today, financial conditions are considerably better than they were then, but significant economic challenges remain. the flow of credit remains constrained, economic activity weak, and unemployment much too high. future setbacks are possible. nevertheless, i think it is fair to say that policymakers'forceful actions last fall, and others that followed, were instrumental in bringing our financial system and our economy back from the brink. the stabilization of financial markets and the gradual restoration of confidence are in turn helping to provide a necessary foundation for economic recovery. we are seeing early evidence of that recovery : real gross domestic product ( gdp ) in the united states rose an estimated 3 - 1 / 2 percent at an annual rate in the third quarter, following four consecutive quarters of decline. most forecasters anticipate another moderate gain in the fourth quarter. how the economy will evolve in 2010 and beyond is less certain. on the one hand, those who see further weakness or even a relapse into recession next year point out that some of the sources of the recent pickup – including a reduced pace of inventory liquidation and limited - time policies such as the " cash for clunkers " program – are likely to provide only temporary support to the economy. on the other hand, those who are more optimistic point to indications of more fundamental improvements, including strengthening consumer spending outside of autos, a nascent recovery in home construction, continued stabilization in financial conditions, and stronger growth abroad. my own view is that the recent pickup reflects more than purely temporary factors and that continued growth next year is likely. however, some important headwinds – in particular, constrained bank lending and a weak job market – likely will prevent the expansion from being as robust as we would hope. i'll discuss each of these problem areas in a bit more detail and then end with some further comments on the outlook for the economy and

ben s bernanke : regulation and financial innovation remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, to the federal reserve bank of atlanta's 2007 financial markets conference, sea island, georgia ( via satellite ), 15 may 2007. * * * good morning. i'm pleased to be able to join you for this year's financial markets conference, albeit from afar. last year the focus was on hedge funds, and the main theme of this year's gathering is credit derivatives. this pairing makes eminent sense, in that the increasing prominence of hedge funds and the growth of the market for credit derivatives are both aspects of the remarkable wave of financial innovation that we have seen in recent years. both of these developments have also been the subject of public policy debates, including calls for increased regulation. in my remarks today i will address, from the 30, 000 - foot level, the challenges that financial innovation poses for public policy and the nature of the appropriate regulatory response. i will argue that central banks and other regulators should resist the temptation to devise ad hoc rules for each new type of financial instrument or institution. rather, we should strive to develop common, principles - based policy responses that can be applied consistently across the financial sector to meet clearly defined objectives. in addressing the challenges and the risks that financial innovation may create, we should also always keep in view the enormous economic benefits that flow from a healthy and innovative financial sector. the increasing sophistication and depth of financial markets promote economic growth by allocating capital where it can be most productive. and the dispersion of risk more broadly across the financial system has, thus far, increased the resilience of the system and the economy to shocks. when proposing or implementing regulation, we must seek to preserve the benefits of financial innovation even as we address the risks that may accompany that innovation. clear thinking is therefore essential. in developing a regulatory framework, we need to be explicit both about what the public policy objectives of regulation are and about how, if at all, fresh developments threaten to undermine those objectives. we should also take into account the role that the market itself can play in controlling risks to public objectives ; as i noted last month, market discipline can be an important element in a well - functioning regulatory scheme. and as i have already observed this morning, any regulatory changes should fulfill the test of consistency, across both institutions and instruments. ensuring a consistent approach in thinking