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Wall Street Journal Editor Speaks on Economy

Wessel, author of the recent In Fed We Trust, discussed the origins of the financial crisis, the current state of the economy, and how to prevent another such fiscal disaster. His talk was sponsored by the Office of Global Affairs and the Diplomacy and World Affairs Department.

Two years ago, a person would have been regarded as "a kook" if he had said this country was on the brink of another Great Depression, Wessel said. After the failure of Lehman Bros in September 2008, the country was only able to avert a repeat of that tragedy because of the decisions of Federal Reserve Chairman Ben Bernanke, Wessel said, calling Bernanke a "hero." The overall story of the last year, he said, is "it could have been worse."

Wessel blames the economic collapse on three failings by the Fed: it kept interest rates too low too long early in this decade; it didn't exercise its regulatory powers; and the philosophy espoused by former Fed chief Alan Greenspan that the Fed should stay out of the way of the financial markets. "That world view was wrong," Wessel said. "The poker table was not well policed. It tipped over. It hurt all of us."

Today, Wessel said, the economy is akin to a person who has had a heart attack and is out of intensive care but faces a long recovery. Bernanke has the delicate task of staving off both a recession and inflation. He is challenged by the fact that Congress is now suspicious of the Fed and is moving very slowly "to give them the power to fix things we know are broken."

Wessel writes the "Capital" column for the Journal, a weekly look at the economy and forces shaping living standards around the world. He also appears frequently on CNBC and National Public Radio. He has shared two Pulitzer Prizes, one for a 1983 series in the Boston Globe on the persistence of racism in Boston and the other for stories in the Wall Street Journal in 2002 on corporate wrongdoing.

In Fed We Trust is available at the Occidental College bookstore.