The Federal Reserve needs to focus just as heavily on its regulatory role as its monetary policy operations, Chairman Ben Bernanke stressed Friday.
That's the lesson that the Fed chairman took away from the Great Recession.
"Going forward, for the Federal Reserve as well as other central banks, the promotion of financial stability must be on an equal footing with the management of monetary policy as the most critical policy priorities," Bernanke said.
Speaking at a conference in New York, Bernanke focused largely on historical events leading up to the recent financial crisis and the central bank's response to it.
He characterized subprime mortgages as a "trigger" of the crisis, but "vulnerabilities" -- like a lack of oversight and regulations -- were also to blame for amplifying the financial shocks, he said.
As a result of the crisis, the Federal Reserve has since taken steps to strengthen its supervision of banks. Bernanke pointed to the Fed's stress tests of the largest U.S. banks as an example of one improvement, but otherwise didn't get into specifics.