>> the following program is presented by skybridge media ll c. anthony: i am anthony scaramucci. welcome to a very special edition of "wall street week." the head of the federal reserve money supply and lending rates, but most of all, carries the responsibility safety of all of us. kaminsky. today, we welcome former federal reserve chairman bernanke, the man who steered this country through one of its worst financial storms in history. lou: this show has never been we'

affected people and their money. >> from times square in new york city, the new "wall street week." anthony: we are pleased to welcome former federal reserve chairman, dr. ben bernanke. it is a huge honor for gary and i to have you on the show. it is tradition to start out with family, origin. i want to go back to growing up carolina. what was your childhood? ben: small southern town. economically, pretty challenged. it was agriculture and textiles. our family was the town pharmacist. moved down and started a drugstore. my father and his brother took over for my grandfather. they were sort of like the town medical practitioners. people would come and ask them

things of that sort. they worked in the drugstore. it was a good experience in many ways. it was a chance to see how people live in a small town and how hard it is to make a living. gary: seeing how small business what did that set you up for struggle? ben: my father was the town pharmacist and he get a lot of people credit. a lot of people could not pay. they would come in and talk to him about what they could pay. it was a tough time. there are still a lot of economic challenges even today. gary: giving people the ability to borrow, did that, years later, shape your thinking on interest rates and how the important? ben: i thought about it. my father was a small businessman. there were some chain stores coming in on the highway.

he and his brother sold the main street store and borrowed money to build a bigger store. he had to get a bank loan for that. i remember him talking to me about the bank loan. credit is critical. you cannot make any economy work without credit. anthony: this is the book, ben bernanke, "the courage to act." i finished it over the weekend. stories growing up and also the stuff at the fed. what kind of jobs did you have in those days? ben: you could earn enough merck -- enough money to pay your costs. i was a construction worker, a manual worker, carrying cement and she locked -- and sheet rock. i was really built at that point. in tremendous shape. in college, i worked with a tourist interaction.

anthony: very popular place. all the bumper stickers up the midway point, even though you in the comfortable. tell us why. ben: because i was bookish. cambridge, massachusetts, at the time, harvard m.i.t. and harvard in this relatively small city. it was a place where you could anything. i remember spending time looking through the course catalog and seeing, my gosh, you can study whatever you want to look at. anthony: your curiosity, able to dip into all of those -- a small t certain that i was going to go locally to college and then i had a friend who was several yearolder than me who through various lucky breaks and harvard.

he was going to convince me to go. he convinced my parents, convinced me. i applied and got in. ben: let' s -- gary: let' s talk about the title of the book, "the courage to act." where does that come from. ben: my wife suggested it and we talked a lot about it. after the crisis, there were a lot of decisions to be made, very high-stakes. they were made in a very tough political atmosphere. people at the fed, the treasury, the president, some numbers of congress. often, the toughest part of the decision was having the courage to take the action. a lot of what was going on was very scary and very unpopular. we had to do what we had to do. anthony: tell us how you met your wife, anna. ben: i was a graduate student at economics. i was working on my thesis and i got introduced to her by my room mates girlfriend. anthony: blind date?

ben: blind date. she said that anna, my wife to be, was nerdy. i was nerdy, so that was as good a basis as anything. we play ping-pong. i don' t remember who won. anthony: how much courage did it take you to ask her out once you had that extreme? -- that experience? ben: after the ping-pong game, i felt pretty rejuvenated and we went to see a movie, as i recall, real artsy kind of movie. anthony: we will be right back with more with ben bernanke. >> i am carl icahn. >> ben bernanke. >> larry summers. >> andre agassi. >> jeff smith. >> i am watching "wall street week."

>> i am watching "wall street week." >> i was on the original "wall street week" and i am pleased to be on the brand-new one. >> and you will too. >> we recap each week in the financial markets and dive deeper into the recent episode feature articles and investment primers. go to wa llstreetweek.com and sign up today. >> what should i do with my money? whether you are a multimillion dollar investor or just sorting out, the answer is betterment. betterment is a smarter way to invest and is the largest automatic investment service in the u.s. if you are building wealth, preparing for retirement, we provide personalized asset allocation and your money is put to work in a globally-diversified portfolio. experience smarter investing and secure your financial future. betterment, investing made

better. and going to work. >> i was tired of being a starving artist. a business that i believed in. >> he helped me create a business plan. think big. >> i am here because of score. >> i am here because of score. anthony: we are back with ben bernanke. gary: most people in the industry think that the crisis started when the bear stearns hedge fund creek -- collapsed. ben: i think that is about right. we did know that prices were high and work starting to fall in 2006. we also knew that mortgages and not doing well.

what we did not appreciate was that this would trigger a broad financial crisis, a panic in the financial markets. we only began to see in things of that in the summer of 2007. gary: were the members of the fed having communications with the executive is running bear stearns? ben: all the time. not me personally, but even people on wall street did not have that clear a vision of what was actually happening in gary: i can still remember the sunday night, being here in the city and lehman collapsed the next day. feels like yesterday to me. tell me about that night. ben: we were worried that if it failed, it would cause a financial panic. it was already serious , but it would go up another level. we tried hard to save it. we used the same strategy we use

potential buyers to new york to try to get some kind of deal done so they would buy lehman and take it off the market. too many losses. in the end, it failed and created a lot of problems in the markets. but we tried really hard to save it. we were just unable to do it. anthony: let' s put it in the context of history like the panic of 1907 or the great depression of 1929. in your opinion, these sorts of banking failures and the impact it has on the psychology of the markets. ben: the federal reserve was actually created about 100 years ago precisely for the purpose of addressing banking panics. a banking panics in the old days was a situation where people lost confidence in their bank and there was no deposit insurance before 1934. people would line up and the bank would fail. anthony: i mentioned sunday, lehman. gary: friday was the scariest

day. that is when everyone was going to the banks and taking cash out of atms. i remember the banks out on long island, where anthony and i live, running out of cash because of the amount of money that was coming out of atms. was that the scariest point for you? ben: that whole week, besides lehman, aig, a lot of companies that were in serious trouble, we also had a run on the money market mutual funds. a lot of people have accounts at the money market mutual funds. in september of 2008, people lost confidence in those ones. gary: what were some of the steps you had to take? ben: the first thing we had to do was be a lender of last resort. throughout the entire system, investors were running away from risk everywhere they could. everybody wanted to hold cash. nobody wanted to hold credit. nobody wanted to hold other kinds of assets. ultimately, we would lend cash to the money market funds, all

different kinds of markets and institutions trying to make sure that firms have the funding they needed to offer credit and to stay in business. anthony: you are up at congress, having this first big meeting. tell our viewers about that meeting. ben: we were going to lend $85 billion to aig so it could its bills. explain why we had to do it and why it was essential to protect the system. the senior citizen -- senator said, i want you to understand one thing. nothing that you have heard tonight constitutes congressional approval. this is your call, your discretion, your responsibility. anthony: in july of 2007, you said that the subprime crisis was a $90 billion problem. when it started to become contagious, it became a bigger and bigger problem.

took big measures to stop a more broader contagion. what were some of those measures that you took? ben: in the old days, it would have been just the banks and depositors pulling money out of banks. in the modern financial system, you have banks, securities dealers, money market funds, commercial paper, another type of market where cash is lent to companies. if you are ford motor and want to finance your inventory, you borrow from the commercial paper market. it was drying up. nobody would lend. the fed stepped in and began backstopping commercial paper so people would have the confidence to lend in a market. view on the short-term market panic. ben: we did it because we' are a public institution and wanted to help protect the economy. every loan that we made was paid back with interest. we turned over lots of profits to the

treasury. anthony: do you acknowledge that the fed could have done more, particularly cutting rates sooner in the crisis? why do you feel that way? ben: in september of 2007, as the crisis was beginning to emerge, we were looking at a number of different risks. we were worried about the crisis. that required the lending that we were doing and cutting interest rates to help the economy. th was one concern. it was not the only concern. inflation was a problem. at the same time, early on, we wanted to be cautious about jumping in and doing too much to help the markets because we want people, we want investors to make decisions they stop the merits of the investment and not thinking, the fed is going to help me whenever i have any kind of problem. we were looking at these different considerations. only over time has it become clear that the overwhelming

problem was the financial crisis , that the economy was slowing it the recession began in october of 2007. gary: one of the reasons subprime might have been underestimated was there were so many products created by the investment banks to be sold. are you surprised there has not been the kind of prosecutions that one would have thought against these financial institutions as a result of that? ben: you said against the institutions. that is pretty much what has happened. the institutions themselves -- for the most part, individuals have not been held responsible. my problems - pr -lem is with the prosecution strategy, to focus on the institutional responsibility. anthony: talk about the future central bankers and say, here is what i learned and here is what to look at. ben: you have to look at the financial system as a whole and not each individual piece, which

is what was happening. you have to be careful when things are going really well. when the situation feels really calm, sometimes there is risk building up below the surface. you have to pay attention to that. you have to make judgments and figure out where the risks are. if there are risks, you have to address those. gary: richard fisher said he was wary that, because you care so much about the american people, it might be difficult for you to make hard decisions. ben: it is hard for anybody to make tough decisions. gary: he says you are an empathetic person. ben: that is interesting. i tried to be empathetic. it is important for policymakers to pay attention to the people behind the numbers. you have to remember that these are real people, real jobs, real homes, real families. when i tried to do and what we all did was to try to do the right thing for main street.

that is what we were trying to accomplish. gary: one of the risks then was that the institutions were too big to fail. is that still a concern? ben: it is still a concern, but we are making a lot of progress on that. there are a lot bigger equity buffers so that if they lose money, they are losing their own money and the shareholders money. for a long time, until you get to a point where you are concerned about the insolvency. if the government can shut them down without creating a broad panic, they are much more inclined to do that. gary: a recent guest said that aig is still too big and still possesses a significant risk to the financial system. any thoughts on that? ben: i do know that, in the process of repaying the fed and the government the money that aig borrowed to stay alive, it did sell off a lot of its

it is a business decision whether it should be even smaller. one of the encouraging things is that some of these rules that make it more costly to be big have encouraged some of the big firms to shrink somewhat. i was a registered republican. anthony: are you still? ben: i always wondered why you could not have insurance to do it serious job on policy maker. >> like us on facebook, follow us on twitter and instagram. "wall street week" is sponsored in part by hightower, and unobstructed view. >> imagine a business built on the premise that delivering straightforward financial advice is the right thing to do. it from the places investor trust as a foundation. rising above the discord of conflicts of interest. hightower is the new blueprint for financial advice. we live by the fiduciary standard, a legal pledge to put

client interests first. not because fiduciary is the latest fad, the -- but because it is what we were built to do. >> checking fantasy? >> just my 401k statement. what i can' t seem to save anything. >> what about this, all the money you are spending? >> what money? i spend it before i get my hands on it. >> i have a pizza for todd. >> can somebody spot me? >> when it comes to financials, don' t get left behind. anthony: you get the call from the white house to become a member of the board of governors. you are going to transition from talking and teaching about implementer -- monetary policy to implementing it. or different? is the way you have to talk.

when you are a college professor, you throw out ideas, give hypothetical examples, silly examples. when you are the fed chairman, every single moment matters. you have to be careful about what you say and make sure that what you say is what you meant to say. that is a big difference between being a college professor and a central banker. anthony: you were appointed by president bush. was your affiliation as a republican or were you nonpartisan? ben: i was a registered republican. anthony: are you still? ben: i have not voted. i do not really know. when i became chairman, i said to myself, this is a nonpartisan position. there is no democratic fed chairman or a republican fed chairman. i am a nonpartisan person. i am not going to vote and i am going to stay out of politics. gary: this is related to the debates. donald trump said that he thinks janet yellen is keeping interest rates low because there is some

sort of political agenda associated with the administration and the election next year. you would say what? ben: i would say that i attended many meetings of the federal open market committee, the committee that makes monetary policy decisions, and there was literally no discussion whatsoever of elections, politics, campaigns. the fed, and this is one of the benefits of having an independent central bank, the fed makes those decisions based best that it can do for the u.s. economy. gary: it is important that we get that out there. unfortunatel this has become such a crazy political season, people can say anything and it just gets out there. anthony: there is some discussion about the fed politics -- policies and exacerbating the income divide. really true. first of all, the fed is using the tools it has.

the people who do not like the implications, the side effects of low interest rates, they say, do not do anything, the economy would stay in recession. the amazing thing that supportive monetary policy does is help create jobs. i do not know who benefits more from more job opportunities than the middle class, the working-class people. i do not get this inequality. gary: a lot of people feel that they follow the rules. they save money, pay for the kids to go to college, put enough money away. they are people that did not go out and speculate and as a result of low interest rates, they have had to shift their retirement asset allocation even where rates are in the fixed-income markets to be more aggressive. what is the message to them? ben: the first thing to understand is that interest rates are low not only in the united states, but all around the world. they are low because there are not enough good capital investments to made.

-- to make. there are not enough high return investments out there. people say, it is the feds fault. that is not quite right. the fed is trying to keep the economy going at a decent pace. if the fed were to raise rates sharply prematurely in an effort to get rates up, it would slow the economy up. the only way to get rates up in a sustainable way is to get the economy moving forward. eventually it will happen, i think. right now, the u.s. economy is growing pretty well. the rest of the world is slowing down. since we do trade and interact with the rest of the world, it has been a bit of a hit to us. gary: you said seven years ago that interest rates were going to be low for the next seven years. you would have expected commodities to be higher. you would think that the fed would be fighting massive inflation. why is that not happening?

ben: we knew there was no risk of inflation. the fed is able to tighten monetary policy, raise interest rates at the appropriate time, and it will be the market completely believe that. the fact that the u.s. government can borrow for 30 years at 3% is basically saying that investors believe that inflation is going to be low for a long time. there is no credibility to the idea that inflation is going to get out of control. good monetary policy keeps inflation low and the fed has been successful in doing that. >> "wall street week" is sponsored in part by coke industries -- koch industries. >> fashionistas, athletes, ballerinas, and first responders, we are honored to have your back. we are koch. >> join millions of americans turning off the old media for newsmax tv.

on directv channel 349 and verizon files channel 115. and we are available online or roku or google tv. download our free app for your iphone or android. find out why millions are tuning in for real news, better talk. >> from the roof over your head to the pillow bonita, families worldwide rely on the daily inventions that we helped make. we are koch. >> "wall street week" is sponsored in part by morgan stanley, where capital creates change. anthony: how is private life treating you? ben: i love being a civilian again. i really do. i love looking in the newspaper and saying, that is a serious problem. i hope somebody does something about that.

good. stronger economy and safer financial system moving forward. my colleagues and i worked really hard to try to achieve that. one thing i would like to be remembered or is that the federal reserve is a lot more open and transparent today than board. anthony: that is something you really address in your book. ben: that was one of our goals. we created the press conference that the fed chairman gives to answer questions directly from reporters. we have provided a lot more information to the public about what our forecast was and what we were thinking about. we created official the 2% target for inflation. making the fed more open and and we made a lot of progress on that. anthony: one of the things that we do at the end of the show is we play word association. we come up with a word and then we get your reaction.

hawaiian shirts versus suits. ben: i always wondered why you could not have hawaiian shirts and still do a serious job of policymaking. it is really hot in washington in the summer and people are wearing these three piece suits. i could not figure that out. gary: what is a perfect day? ben: getting up, putting on my jeans and my hawaiian shirt and driving to the institution, spending the day reading, writing, working on my research projects. anthony: idleweis. ben: it is a swiss flour. when i was 11 or 12, i went to washington to compete for the national finals of the spelling competition. i would have won, but i could not spell it. anthony: i cannot pronounce it, you could not spell it. gary: i had many sleepless nights in 2007-2008.

ben: i would like to say our dog, but i sleep pretty well, thank you. anthony: we want to thank dr. ben bernanke for spending time today with "wall street week." that is it for today. you can check in with us all week on wal lstreetweek.com. until next sunday, have a prosperous week. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> the preceding program was paid for and presented by

. (applause) well, god bless you. it's our joy to come into your homes and if you're ever in our area, please stop by and be a part of one of our services. i promise you we'll make you feel right at home. but thanks so much for tuning in today and thank you again for coming out. i like to start with something funny. i heard about this husband. he was quietly reading his newspaper when his wife snuck up behind him and hit him in the head with a frying pan. he said, "what was that for?" she said, "that was for the piece of paper i found

in your pocket with the