(Bloomberg News) Federal Reserve Chairman Ben S. Bernanke said the central bank's policies last decade weren't responsible for the housing price bubble that led to the recession.
"Some have argued that the Fed's low interest rate monetary policy in the early 2000s contributed to the housing bubble, which in turn was a trigger of the crisis," Bernanke said today in the second of four lectures on the history of the Fed that he plans to deliver at George Washington University, according to slides of his presentation.
"Most evidence suggests otherwise," Bernanke said in slides focused on historical topics and not current monetary policy or the economic outlook. In defense of the Fed, Bernanke cited house price booms in foreign countries and said the size of the boom was too large to be explained by changes in mortgage rates. Also, home prices began to rise in the late 1990s, even before the Fed lowered rates, he said.
Bernanke, a former economics professor at Princeton University, is returning to the classroom this week and next to explain the central bank's actions during the financial crisis and the longest recession since the Great Depression. His lesson today is titled "The Federal Reserve after World War II."
The chairman plans to speak on March 27 and March 29 about the Fed's response to the financial crisis and the ensuing recession. The lecture series will be streamed live on the Fed's website and on ustream.tv.