Bernanke Says Recession Technically Over

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Federal Reserve Bank Chairman Ben Bernanke said Tuesday that the U.S. financial system is beginning to emerge from a deep recession that is "technically over" and could have been "decidedly worse" had the U.S. and other countries not taken "aggressive" policy action.

Speaking at a forum at the Brookings Institution in Washington, D.C. Bernanke said that that the economic crisis was leveling out, but repeated his calls for regulatory reform, saying that the financial crisis emphasized the need to "urgently" address financial weaknesses so that similar financial collapses don't happen again.

"Looking forward, we must urgently address structural weaknesses in the financial system, in particular in the regulatory framework, to ensure that the enormous costs of the past two years will not be borne again," the Bernanke said, repeating comments he made last month in at an annual Fed retreat at Jackson Hole, Wyoming.

Bernanke also said that he expected slow growth in the economy, but cautioned that unemployment, now at a quarter-century high 9.7 percent, edge higher before declining gradually.

"Strains persist in many financial markets across the globe, financial institutions face significant additional losses, and many businesses and households continue to experience considerable difficulty gaining access to credit," he said.

The Fed chief then echoed his recent calls for the U.S. to develop a wider variety of responses to financial struggles in order to better manage liquidity.

The experience has underscored that liquidity risk management is as essential as capital adequacy and credit and market risk management, particularly during times of intense financial stress," he said.

Bernanke added later during a question and answer session that the country could not rely on the markets being open and liquid at all times, and that there must be adequate planning and provision when it comes to liquidity so that companies can last through several months of "intense" conditions.

"Liquidity guidelines must take into account the risks that inadequate liquidity planning by major financial firms pose for the broader financial system, and they must ensure that these firms do not become excessively reliant on liquidity support from the central bank," he said during his speech.

Federal Reserve Bank Chairman Ben Bernanke said Tuesday that the U.S. financial system is beginning to emerge from a deep recession that is "technically over" and could have been "decidedly worse" had the U.S. and other countries not taken "aggressive" policy action. (Market News Provided by RTTNews)