Bernanke and Regulation: The Perils of Headline Writing
David C. John /
Interpreting statements of Federal Reserve Chairmen has long been considered a high art form. During Alan Greenspan’s time, journalists and financial analysts made huge efforts to understand his cryptic comments on the economy, with the result that a few sentences could spawn literally pages of analysis designed to “explain” the possible contents of Greenspan’s comments. Most of that analysis was incorrect.
Now, journalists and especially headline writers are attempting to apply the same techniques to Ben Bernanke’s comments. The most widely quoted sentence contained in a scholarly paper he delivered on January 3 before the American Economic Association (AEA) was: “Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates.”
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