ben s bernanke : confirmation hearing testimony by mr ben s bernanke, chairman of the board of governors of the federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 3 december 2009. * * * chairman dodd, senator shelby, and members of the committee, i thank you for the opportunity to appear before you today. i would also like to express my gratitude to president obama for nominating me to a second term as chairman of the board of governors of the federal reserve system and for his support for a strong and independent federal reserve. finally, i thank my colleagues throughout the federal reserve system for the remarkable resourcefulness, dedication, and stamina they have demonstrated over the past two years under extremely trying conditions. they have never lost sight of the importance of the work of the federal reserve for the economic well - being of all americans. over the past two years, our nation, indeed the world, has endured the most severe financial crisis since the great depression, a crisis which in turn triggered a sharp contraction in global economic activity. today, most indicators suggest that financial markets are stabilizing and that the economy is emerging from the recession. yet our task is far from complete. far too many americans are without jobs, and unemployment could remain high for some time even if, as we anticipate, moderate economic growth continues. the federal reserve remains committed to its mission to help restore prosperity and to stimulate job creation while preserving price stability. if i am confirmed, i will work to the utmost of my abilities in the pursuit of those objectives. as severe as the effects of the crisis have been, however, the outcome could have been markedly worse without the strong actions taken by the congress, the treasury department, the federal reserve, the federal deposit insurance corporation, and other authorities both here and abroad. for our part, the federal reserve cut interest rates early and aggressively, reducing our target for the federal funds rate to nearly zero. we played a central role in efforts to quell the financial turmoil, for example, through our joint efforts with other agencies and foreign authorities to avert a collapse of the global banking system last fall ; by ensuring financial institutions adequate access to short - term funding when private funding sources dried up ; and through our leadership of the comprehensive assessment of large u. s. banks conducted this past spring, an exercise that significantly increased public confidence in the banking system. we also created targeted lending programs that have helped to

insight into industry practices and possible emerging risks. to complement on - site supervisory reviews, we are also creating an enhanced quantitative surveillance program that will make use of the skills not only of supervisors, but also of economists, specialists in financial markets, and other experts within the federal reserve. we are requiring large firms to provide supervisors with more detailed and timely information on risk positions, operating performance, and other key indicators, and we are strengthening consolidated supervision to better capture the firmwide risks faced by complex organizations. in sum, heeding the lessons of the crisis, we are committed to taking a more proactive and comprehensive approach to oversight to ensure that emerging problems are identified early and met with prompt and effective supervisory responses. we also have renewed and strengthened our longstanding commitment to transparency and accountability. in the making of monetary policy, the federal reserve is highly transparent, providing detailed minutes three weeks after each policy meeting, quarterly economic projections, regular testimonies to the congress, and much other information. our financial statements are public and audited by an outside accounting firm, we publish our balance sheet weekly, and we provide extensive information through monthly reports and on our website on all the temporary lending facilities developed during the crisis, including the collateral that we take. further, our financial activities are subject to review by an independent inspector general. and the congress, through the government accountability office, can and does audit all parts of operations, except for monetary policy and related areas explicitly exempted by a 1978 provision passed by the congress. the congress created that exemption to protect monetary policy from short - term political pressures and thereby to support our ability to effectively pursue our mandated objectives of maximum employment and price stability. in navigating through the crisis, the federal reserve has been greatly aided by the regional structure established by the congress when it created the federal reserve in 1913. the more than 270 business people, bankers, nonprofit executives, academics, and community, agricultural, and labor leaders who serve on the boards of the 12 reserve banks and their 24 branches provide valuable insights into current economic and financial conditions that statistics cannot. thus, the structure of the federal reserve ensures that our policymaking is informed not just by a washington perspective, or a wall street perspective, but also a main street perspective. if confirmed, i look forward to working closely with this committee and the congress to achieve fundamental reform of our system of financial regulation and stronger, more effective supervision. it would be a tragedy if, after all the hardships that americans have endured