How is a recession like a bad joke? Ben Bernanke couldn’t stop either in 2008.
Even in the grimmest of times, Federal Reserve officials maintained a sense of humor, regaling their colleagues with jokes about their spouses, eating habits and grammatical errors.
By the end of 2008, the Fed had launched so many emergency lending programs that then-Chairman Bernanke spoke of “the various credit facilities for which even I do not know all the acronyms anymore.”
Still, the jokes were less frequent as the financial crisis deepened. A search of 1,865 pages of transcripts for 2008 released today found an average of 25 references to laughter per meeting of the Federal Open Market Committee, down from about 45 in 2007.
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In January, in the midst of the housing crisis, then-Governor Frederic Mishkin said he had just bought a home, even as home-price declines were forecast to worsen.
“As somebody who stupidly is just going to contract on a new house because I have to please my wife, I actually thought exactly along these lines and was thinking about pulling out but then decided that my marriage was more important,” Mishkin said.
“It was close,” said Gary Stern, president of the Minneapolis Fed at the time.
“By the way, if you know my wife, no it wasn’t close,” Mishkin said.
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On Sept. 16, the art of Fedspeak led to a grammatical mishap. Richmond Fed President Jeffrey Lacker questioned whether the Fed should say it was monitoring financial markets “closely.” What would it imply if the Fed took the word out, he wondered.
“Well, we have done things like ‘in a timely manner’ and other kinds of phraseology,” said Governor Kevin Warsh.
“Yes, but this is an adjective,” Lacker said.
“No, it’s an adverb,” Bernanke corrected.
“There goes my credibility,” Lacker said.
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As Fed officials debated whether inflation would subside, Dallas Fed President Richard Fisher pointed out that his favorite bakery had raised its prices.
“My biggest disappointment, incidentally, was that the one bakery that I’ve gone to for 30 years, Stein’s Bakery in Dallas, Texas, the best maker of not only bagels but also anything that has Crisco in it, has just announced a price increase due to cost pressures,” he said.
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During the Oct. 28-29 meeting, officials couldn’t resist jokes about Halloween.
“In the run-up to Halloween, we have had a witch’s brew of news,” said Janet Yellen, then president of the San Francisco Fed and now the Fed chair.
Chicago Fed President Charles Evans quipped that “people are spooked.” Both policy makers felt the need to qualify their remarks with “sorry.”
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Earlier that month, the Labor Department reported the economy had lost 159,000 jobs in September, and officials were finding little reason for optimism.
“I guess the best thing I can say about the Third District right now is ‘Go Phillies!,’” said Charles Plosser, president of the Philadelphia Fed. The next day the Phillies won baseball’s World Series for only the second time in the team’s history.
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In December, Yellen summarized the state of the nation’s banks, many of which had collapsed.
“An accounting joke concerning the balance sheets of many financial institutions is now making the rounds, and it summarizes the situation as follows: On the left-hand side, nothing is right; and on the right-hand side, nothing is left.”
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