The former Fed chief in his testimony to the congress has refused to acknowledge the Fed’s role in the economy’s collapse. Furthermore he said that it will be nearly impossible to prevent the next financial collapse if more regulations regarding capital requirements etc are not put in place.
Although I don’t agree with the fact that the Fed was completely blameless in the whole financial fiasco (remember the time when it was said that the adjustable rate mortgage is better than the fixed rate one if you are just staying for a few years in the house). But I do agree with the statement that unless we have stringent capital requirements in place plus other regulations to monitor the risky trades, we would not be able to help out the next recession (depression) since we are used almost our all the resources (in the shape of stimulus (borrowed) money) and other Fed measures. Right now we simply don’t have enough money to pay for all the bailouts and if in the future we need such thing that from where are we going to get the money since we are now borrowing anyway and who will trust us with their money since out debt has grown way to much and increasing second by second without paying any of the principal.
These are the things which the law makers and the Fed has to ponder as we move forward.