Bernanke on Bankers on Fed Boards, Too Big to Fail and Deflation —WSJ Real Time Economics

Jon Hilsenrath at the WSJ’s Real Time Economics blog captures  some interesting tidbits from Federal Reserve Chairman Ben Bernanke‘s testimony which go beyond the big question of whether the Fed will try to ease financial conditions again:

ON THE ROLE OF BANKERS ON REGIONAL FED BANK BOARDS: Bernanke says Congress set this system up which requires bankers on its regional bank boards. If Congress wants to change the law, the Fed will work with it.

ON TOO BIG TO FAIL: People argue that the government should break up big banks. “I think it is incredibly important to end too big to fail,” he says. But he hasn’t seen anybody specifies exactly how to break up the big banks. Instead, he says the best way to address too big to fail is to take away the advantages of being big, such as by using tougher supervision of the big banks and higher capital accounts.

ON DEFLATION RISKS: Worries about deflation weighed heavily on the Fed in 2008 and 2009. Not anymore. Deflation, Mr. Bernanke said, is not at the forefront of his concerns.

Fed Chief Peers Into Future