Bernanke Says He Wasn't 'Straightforward' in Congressional Testimony

Federal Reserve Chairman Ben Bernanke said Thursday that he regretted not saying in Congressional testimony that the central bank had no authority to save Lehman Brothers.

According to a Bloomberg report, "The testimony at the time "has supported this myth that we did have a way of saving Lehman," Bernanke said today in response to questions during a Financial Crisis Inquiry Commission hearing in Washington. "I regret not being more straightforward there because clearly it has supported the mistaken impression that in fact we could have done something."

"It was a judgment at that moment, with the system in tremendous stress and with other financial institutions under threat of a run or panic, that making that statement might have even reduced confidence further and led to further pressure," Bernanke said today.

The Bloomberg report notes that "Bernanke made the remarks to explain the disparity between his September 2008 testimony that the Fed and U.S. Treasury "declined to commit public funds to support the institution" and later statements that the government had no option to save Lehman because of inadequate collateral. The Fed decided at the time against saying Lehman was unsalvageable because it may have risked further panic in financial markets, Bernanke said today."

"It was the judgment made by the leadership of the New York Fed and the people who were charged with reviewing the books of Lehman that they were far short of what was needed to get cash to meet the run," Bernanke said. "That was the judgment that was given to me."

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