WASHINGTON (MNI) – The following is an excerpt from Federal Reserve
Chairman Ben Bernanke’s semi-annual hearing Q&A session Tuesday for the
Senate Banking Committee:
When asked about the Euro crisis:
BERNANKE: As for the European sovereign and banking situation,
which remains unresolved, there is still alot of financial stress
associated with that and still some distance before they get to a
solution. That poses an ongoing drag on our economy and although I have
every hope and expectation that European leaders will find solutions,
there is the risk of a more serious financial blowup. We have been
taking appropriate steps here in the United States to prepare for
whatever events might occur.
Well we appear to be in a muddling through type of environment
which is costly to everybody, Europe even more so than us. Europe is in
a recession, well at least many countries in Europe are already in a
recession. Based on all I can observe it could take a very long time
because the structural institutional changes Europe is trying to make
are not ones to take place quickly. For example, they recently agreed in
principle to create a single bank regulator for Eurozone banks. To do
that could take some time. I don’t have inside information, but could go
into next year before they have a single bank regulator. Likewise, they
are trying to establish a set of fiscal rules and agreements and they
have made some progress there, but given that there are 17 governments
that have to agree to every major change it could be some time before
they have come to a fully satisfactory fiscal arrangement, so it appears
that it could be something that goes on for quite a while unfortunately.
** MNI Washington Bureau: (202) 371-2121 **
[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$]
