How Bernanke Deals With The Financial Crisis And The...

First of all, before reading this book, I did some research of Ben Bernanke, who is the writer of this book. Bernanke is not only the former Fed Chairman but also a great and knowledgeable economist. President Obama described him as â€Å"epitome of clam†. However, his career has huge merit, also has artificial wrong, merit half-and half. The Wall Street Journal commented that after suffering a financial crisis which he has never been through, the Fed Chairman Ben Bernanke lead United States avoid involving into a devastating panic. After five years, he used uncustomary policy to help United States to achieve economic recovery; however, the result is frustrating. He left behind the legacy which mingled with failure, fearless, persistent,†¦show more content†¦However, Bernanke admonished investors by the book that even though banking regulation and supervision protect investors as always, if some particular events or financial crisis happened, like housing bubble and mortgage markets crisis, either or both of these two system work. The example in the book is booming house prices in 2000s. After the sharply increasing of housing prices, risky mortgage lending likes subprime lending trouble began surfacing in 2006 and 2007. The risky mortgage comes with more demand for housing, which will again push the housing prices higher and higher, reinforcing a vicious cycle. As a result, because of the nominate housing price is much higher than the real price, the careful lenders who have good credit step out the market, the rest of borrowers are subprime lenders, â€Å"some borrowers were defaulting on loan after making only a few, or even no, payments.† (318) In the book, Bernanke conceded that Fed responded the trouble slowly and cautiously. When Board in Washington determined to make supervision of bank more centralized, he still overconfidently believe that Reserve Bank staff were better informed about condition in their districts. Another Berna nke’s conceit is that the financial regulatory system was not as stable and comprehensive as he thought before the financial crisis. In