Salient to Investors:

Kristin Forbes at MIT said Bernanke was incredibly creative in the different steps and programs he took to prevent a free fall of the global economy, and made decisions with highly imperfect information, necessary in a crisis.

Vincent Reinhart at Morgan Stanley said the Fed legacy is still open – we survived but the question is what are the consequences?

Tad Rivelle at TCW Group said the Fed’s operations under Bernanke were very intrusive, and expects his legacy will ultimately be negative as policies used during the crisis and slow recovery lead to future instability, perhaps social and political as well as financial. Rivelle said the Fed’s low-rate policies are providing “preferential access” to a privileged group of borrowers: the government, corporations and consumers with the highest credit scores.

Jeffrey Lacker at FRB Richmond warns that if the perception of government guarantees against financial risk is not reduced, it will set the stage for another crisis. Richmond Fed economists estimate that the proportion of the total liabilities of US financial firms covered by an implicit or explicit federal safety net increased by 27 percent over the past 12 years.

Phillip Swagel at the University of Maryland said we won’t know if too-big-to-fail has been solved until the next crisis – the tools exist to take down a troubled bank, but the unknown is the will of the government.

Julia Coronado at BNP Paribas said the Fed is intervening in the yield curve, in liquidity markets, in many asset classes, and the book’s last chapters have yet to be written, and there’s still a lot of risk.

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