He was one of the great faces of the 2008 crisis: the Nobel Prize in Economics was awarded on Monday to Ben Bernanke, the former president of the American central bank (Fed) and his compatriots Douglas Diamond and Philip Dybvig, for their work on banks and their necessary bailouts during financial storms.
The former central banker, even if he did not prevent the bankruptcy of the American investment bank Lehman Brothers in 2008, has remained in recent economic history as the “Ben helicopter”, which opened the financial floodgates of the Fed so as not to reproduce the errors of the excessively brutal tightening of its predecessors of the 1930s, which had contaminated the stock market slump on production and employment.
The former professor of economics, a specialist in the Great Depression, left his post as head of the Federal Reserve eight years ago when he saw his role in bringing the American economy out of the crisis. The award-winning trio “has significantly improved our understanding of the role of banks in our economy, particularly during financial crises, as well as how to regulate financial markets”, welcomed the Nobel jury.
Bank collapse research
“An important discovery of their research”, whose work began from the 1980s, “was to show why avoiding the collapse of banks is vital”, underlined the committee of the Swedish Academy of Sciences responsible for awarding the prize. price.
Aged 68, Ben Bernanke was chairman of the Federal Reserve (Fed) between 2006 and 2014, a tenure marked by the financial crisis of 2008-2009 and the fall of the American bank Lehman Brothers. The largest bank failure in US history sparked a global financial crisis and underscored the risk posed by “too big to fail” banking giants.
The former central banker notably analyzed the Great Depression of the 1930s, the worst economic crisis in modern history, underlined the Nobel jury. In particular, he showed how massive withdrawals – “bank runs” – “were a decisive factor in prolonging and worsening crises”. The jury, however, makes no direct reference to Ben Bernanke’s action at the head of the Fed in the motivations for his award.
A Nobel Prize sometimes criticized
Douglas Diamond, born in October 1953, and Philip Dybvig, 67, respectively professors at the University of Chicago and Washington University in Saint Louis, have developed theoretical models showing why banks exist and why their role in society makes them vulnerable to rumor about their impending collapse. This work led in particular to the Diamond-Dybvig model on “self-fulfilling” bank runs, recalls the Nobel committee.
Isn’t it paradoxical to give a price for the need to save the banks to the one who was at the helm for the largest of them? Reached by the Nobel jury, Douglas Diamond acknowledged that it would “probably have been better” if Lehman’s bankruptcy had been avoided, but that it had taken place too abruptly to do otherwise. “It would have been better to find a more accommodating, less unstable and unplanned way to resolve Lehman Brothers,” he said.
The only one not to have been provided for in Alfred Nobel’s will, this prize created by the Swedish Central Bank “in memory” of the inventor was added in 1969 to the five traditional awards (medicine, physics, chemistry, literature and peace), earning him the nickname of “false Nobel” among his detractors. This year, two French people were honored with a prestigious Nobel: Annie Ernaux, in literature, and Alain Aspect in physics.