Readers, I will confess I am only a user of garden variety search tools, with no special training, merely years of trial and error. I am having to do a quite a bit of rooting around these days to track down support for various arguments I am putting together for the book.
I decided to locate a little example of Fed mis-prognostication, a declaration by Bernanke as two Bear Stearns hedge funds were imploding in July 2007, done in by an overdose of subprime and leverage. He had said around then that subprime losses were expected to be $50 to $100 billion. I recall gasping out loud when I read that, because no one in the private sector had had loss estimates like that for a while. The lowest estimates I was seeing around then was $150 billion.
So a quick Google search unearthed a MarketWatch story, reporting on Senate testimony by Bernanke. It sounded like quite the relic. Not only did it have the estimate I so fondly recalled, but it had doozies like this:
Federal Reserve Chairman Ben Bernanke said Thursday that there will be “significant losses” associated with subprime mortgages but that these losses should be regarded as “bumps” along the road of market innovation….
Bernanke said these were “market innovations” and “sometimes there are bumps” in the new-product road…
In addition, Bernanke told members of the Senate Banking Committee that the pain and suffering felt from foreclosures and delinquencies will “likely get worse before they get better.”
Yves here. Well, he was sure right about the last bit. Back to the story:
Sen. Richard Shelby, R-Ala., said he was worried that the subprime market’s weakness may have broader systemic consequences.
“We have been told the problem is largely isolated and contained, but I am concerned that it may not be,” Shelby said….
Bernanke said there were going to be “significant losses” in subprime-mortgage paper, citing estimates ranging from $50 billion to $100 billion.
This was July 19, 2007, less than a month before the first acute phase of the credit crisis.
The MarketWatch story provided a link to the prepared testimony, which was identical to his formal statement to a House panel earlier in the week.
The link now takes you to a “Page Not Found” page at the Federal Reserve Board of Governors website.
I have found links in articles that are still valid for speeches before that date, so it is hard to attribute this change to routine website housekeeping, but I do like to give people the benefit of the doubt. So I went and did a couple of searches on the Board of Governors website, one on a phrase in the article “sometimes there are bumps” and then just on the words bump AND innovation AND subprime. I realize “bump” may not have been his testimony, but in response to questions, so I also tried just “subprime” AND “innovation”. I got 59 items, not a single one from July 2007.
Now I may have failed to happen across the right search string and readers are welcome to prove me wrong. However, it does look like this bit of history got expunged.