In the context of actions taken to support the financial system, the Federal Reserve and other government agencies have provided considerable support to banking organizations and other large systemically important financial institutions. The employees and executives of those institutions have benefitted from our intervention. In a perfect world we would be able to prevent those individuals and institutions from benefitting; we would have a better way to penalize those who acted recklessly. But once the crisis was underway, one goal took precedence: keeping the financial system from collapsing in order to protect the nation from an even deeper and more protracted downturn that would have been more damaging to everyone. The Great Depression represents an important example of the consequences of inaction. Recall that during the Great Depression the unemployment rate rose to 24 percent. It is generally accepted that the authorities at that time, by not responding sooner and more forcefully, contributed greatly to the severity and duration of the Great Depression. In contrast, during this crisis, the Fed and other agencies acted much more aggressively to ward off a total collapse of our financial system – liquidity was restored to markets and the banking system was recapitalized much more quickly. These aggressive actions helped to prevent the type of deep and protracted crisis that occurred during the 1930s. Going forward, the Federal Reserve and other regulators need to move aggressively to change the system so we don’t ever find ourselves in this position again.
1/4  BIS central bankers' speeches  More will be done if necessary, of course, but the diagnosis that was reached yesterday by the Governing Council is that a little less is necessary today because growth is stronger and Europe is doing better. And to make this quite clear, how much will the ECB disburse in, say, 2017? The decision that was taken yesterday is to extend our asset purchases for a further nine months by buying € billion per month of various financial instruments, which makes an additional € billion euro. That’s the decision: we will add € billion to the € billion per month planned for the first three months of 2017, making € billion, so for the whole of 2017 that comes to slightly less than € billion extra compared with what we are doing already. And since March 2015? Asset purchases today come to around € trillion in total, so if we add 1,500 and 800 it means that, at the end of next year, we’ll be at just over € trillion. Yes, and you realise that with this € trillion growth is good, average, but it’s not stronger. What would happen without this € trillion? Well, without it, if the ECB wasn’t doing what it’s doing, growth would be between 0% and 1%, inflation would be close to zero and unemployment wouldn’t be falling in the euro area. But as you know, unemployment is now falling fairly quickly in the euro area.