The Time: Jan. 13, 2009.
The Place: The London School of Economics
The Person: Ben Bernanke, making a speech
His Key Words: Credit Boom
“However, although the subprime debacle triggered the crisis, the developments in the U.S. mortgage market were only one aspect of a much larger and more encompassing credit boom whose impact transcended the mortgage market to affect many other forms of credit…”
Bernanke admits there was a credit boom. Now, Benjamin, what causes excessive credit? His answer:
“Aspects of this broader credit boom included widespread declines in underwriting standards, breakdowns in lending oversight by investors and rating agencies, increased reliance on complex and opaque credit instruments that proved fragile under stress, and unusually low compensation for risk-taking.”
His Grade: F
