Federal Reserve Chairman Ben Bernanke

By Zachary A. Goldfarb and Neil Irwin
Published: August 14

Barely two years after the financial crisis ended, Treasury Secretary Timothy F. Geithner and Federal Reserve Chairman Ben S. Bernanke were back at it about a week ago. They were working the weekend phones with their counterparts in Europe, urging them to use overwhelming force to contain the continent’s spreading debt crisis, which was unnerving markets on both sides of the Atlantic.

Geithner and Bernanke could speak with authority. As two of the architects of the United States’ own financial rescue starting in 2008, they had eschewed half-measures, instead marshaling hundreds of billions of dollars to bail out the banks and successfully head off a new Great Depression.

But as the pair again donned the cloak of crisis fighters, their efforts underscored what’s changed in the last three years. The men, battle-hardened and more experienced, now have little more than the power of persuasion. No longer can they muster the same range of policy tools and supporters they had in 2008 should the European crisis become an even greater menace to the U.S. economy.

As Europe’s financial worries spread to new countries and financial firms last week, U.S. and other global markets experienced one of the most tumultuous weeks of trading in their histories. Markets open again Monday with persisting concern about Europe, anxiety about the prospect of a double-dip recession and continuing fallout from the historic downgrade of the U.S. credit rating by Standard and Poor’s earlier this month.

When the financial crisis hit in 2008, Bernanke was a relatively new Fed chairman, and Geithner was his chief emissary on Wall Street as president of the Federal Reserve Bank of New York. Along with then-Treasury Secretary Henry M. Paulson Jr., whom President George W. Bush tapped to lead the rescue, they organized the massive and unpopular bailout that helped stem a rapid financial decline.

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