I agree with those critics who argue that there was something fundamentally unfair about the disparity in treatment between the few large financial institutions that were saved versus the millions of individuals who lost their homes or their jobs. My response is not particularly satisfying. Recessions inflict considerable pain on innocent bystanders in the economy. Depressions greatly compound this pain. Given the Federal Reserve’s role and authority, what we knew at the time and the powers and tools that were available to us, I think we made good choices. If the large systemic banking organizations had failed, the hardships inflicted on households and small business would have been far worse.

From my perspective, I believe that any critique of the Fed or other agencies should be focused more on the regulatory and supervisory shortcomings—some of which, I admit, were ours—that created the economic and financial market circumstances in which the Fed’s extraordinary interventions proved necessary.