Bernanke defends Fed's bailout plan

WASHINGTON | KANSAS CITY: Federal Reserve chairman Ben S Bernanke defended bailouts by the Central Bank and other unprecedented efforts to end the credit crisis, saying he sought to avoid a ���second Great Depression.���

���In a financial crisis, if you let the big firms collapse in a disorderly way, it will bring down the whole system,��� Bernanke said at a town-hall-style meeting in Kansas City, Missouri, taped for broadcast this week on PBS television. ���I was not going to be the Federal Reserve chairman who presided over the second Great Depression.���

Bernanke���s appearance indicates he���s stepping up public-relations efforts while confronting criticism from lawmakers over government aid to big financial firms. His first term at the Fed���s helm ends January 31, and President Barack Obama needs to decide whether to reappoint him for another four years.

Vincent Hogan of Kansas City, a human resources manager at General Motors and a member of the forum���s audience, said he believed Bernanke showed ���honesty and candour.��� Before the meeting, Hogan, 45, said he thought Bernanke acted under political pressure during the height of the financial crisis last year. ���I understand now there were some dire economic situations back then,��� he said in an interview.

The Fed rescued Bear Stearns and American International Group last year while backing creation of the $700-billion Troubled Asset Relief Program.

Bernanke, 55, said he had to ���hold his nose��� over the bailouts of large financial firms. Responding to a small-business owner ���frustrated��� over the billions of dollars in aid, Bernanke said, ���I understand your frustration.���

���We���re working really hard to try to make it better,��� Bernanke said, referring to Fed efforts to improve credit for small businesses. The questioner, David Huston, said in an interview after the forum that he hasn���t yet seen positive results. ���They can say they���re putting money into the banks to help distribute loans, but I don���t see it,��� said Huston, 56, president of Olson Manufacturing and Distribution in Shawnee, Kansas.