CNBC Transcript: Former Fed Chairman Ben Shalom Bernanke Speaks with CNBC’s Andrew Ross Sorkin on “Squawk Box” Today
WHEN: Today, Wednesday, March 25, 2020
WHERE: CNBC’s “Squawk Box”
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CNBC’s Full Interview With Former Fed Chairman Ben Shalom Bernanke On Coronavirus Impact
ANDREW ROSS SORKIN: Thanks. The Federal Reserve taking unprecedented series of steps to try to shore up the economy in recent days, from cutting interest rates to near zero, to unveiling an essentially open-ended quantitative easing program. It is all reminiscent of the emergency actions the Fed took during the financial crisis but could also be looked at as even bigger. Joining us right now for some important perspective on all of this is Ben Shalom Bernanke. He’s the Former Fed Chair and Brookings Institution Distinguished Fellow. He’s joining us on the news line. And we appreciate you, Ben, in joining us this morning.
CHAIRMAN BEN SHALOM BERNANKE: Good morning. Good to be here.
ANDREW ROSS SORKIN: Chair Bernanke, if you could, I’ve seen you now say you don’t think this is like the financial crisis, but some of the steps the Fed is taking it looks like it could be even bigger. How do you think about it?
BEN SHALOM BERNANKE: Well, the financial crisis was a collapse of the financial system. That’s where it started, with the subprime mortgages and loss of confidence in the financial system. Credit broke down and then that was what hurt and, you know, really damaged the real economy, the rest of the economy. In this case, it’s kind of the other direction. Of course, the source of the problem is the virus which is shutting down the economy and putting a lot of businesses into hiatus. But that means that the banks who are lending to those firms are, you know, taking losses or will take losses.
And so, the infection, so to speak, is going in the other direction from the economy to the financial system. There’s a lot of stress in the financial system right now. The good news is that we came into this with a much stronger banking system, a much healthier financial system than we had in 2007. So, I’m hopeful that it will stand up under the strain and help us be a positive force in getting back to normal.
ANDREW ROSS SORKIN: Jim Bullard just spoke with us and suggested that we walked into this in a 4% unemployment world. That maybe might spike at some kind of 30% unemployment in the second or third quarter. But he could see us at the end of the year or early 2021, being back at 4%. Does that make sense to you? There are some questions about sort of this snapback idea and whether that’s possible.
BEN SHALOM BERNANKE: Well, it is possible. …read more
Source:: Usa Today News