Bunning Grills Bernanke, With Response

[D-Mack]

In response to a question from Sen. Jim Bunning in November of '05, Bernanke said the following:

• “I believe that the tools available to the banking agencies, including the ability to require adequate capital and an effective bank receivership process are sufficient to allow the agencies to minimize the systemic risks associated with large banks."

• "Moreover, the agencies have made clear that no bank is too-big-too-fail, so that bank management, shareholders, and un-insured debt holders understand that they will not escape the consequences of excessive risk-taking. In short, although vigilance is necessary, I believe the systemic risk inherent in the banking system is well-managed and well-controlled.”

Bunning entered the '05 quotes into the official record for Bernanke's 2009 reconfirmation hearings:

• "That should sound familiar Mr. Chairman, since it was part of your response to a question I asked about the systemic risk of large financial institutions at your last confirmation hearing in 2005. I’m going to ask that the full question and answer be included in today’s hearing record."

• "Now, if that statement was true and you had acted according to it, I might be supporting your nomination today. But since then, you have decided that just about every large bank, investment bank, insurance company, and even some industrial companies are too big to fail. Rather than making management, shareholders, and debt holders feel the consequences of their risk-taking, you bailed them out. In short, you are the definition of moral hazard."

http://dailybail.com/home/you-wont-b...at-his-20.html