Ben Bernanke talked to Scott Pelley last night on "60 Minutes". Rare for a Federal Reserve chairman to give a formal interview, the first in 20 years. -------------------- Bernanke explains to Pelley that the Federal Reserve system was created by Congress in 1913 - "and it's original purpose was to deal with financial panics, which is what we're doing right now." Scott Pelley: "You didn't rescue Lehman Brothers. It set off a worldwide panic when it went bankrupt, and I wonder, looking back, whether you think that was a mistake? Bernanke: There are many people who said "Let 'em fail!, you know? ""It's not a problem, the market will take care of it"... and I think I knew better than that. And Lehman proved that you cannot let a large internationally-active firm fail in the middle of a financial crisis." Pelley asks why are we bailing out Citigroup and AIG and other financial institutions multiple times? Taxpayers give billions, then they come back for more. Shouldn't failed institutions fail? Shouldn't the wages of failure on Wall Street be failure? Bernanke: Well, let me give you an analogy, if I might. You have a neighbor who smokes in bed, and he's a risk to everybody, and suppose he sets fire to his house. You might say to yourself -- "I'm not gonna call the fire department. Let his house burn down! Fine with me." But, then, what if your house is made of wood, and it's right next door to his house. What if the whole town is made of wood? I think we'd all agree that the right thing to do is put out that fire first, and then say, What punishment is appropriate, how should we change the fire code, what needs to be done to make sure this doesn't happen in the future, how can we firproof our houses? That's where we are now. We have a fire going on. Pelley: It's still burning. Bernanke: It's still burning. Hopefully, these youtube links will remain active: YouTube - Bernanke 1/3: Bernanke had freedom to act, didn't need permission from Congress or president! YouTube - Bernanke 2/3: Federal Reserve is the life blood of the banking system! YouTube - Bernanke 3/3: We had a regulatory system that was like a sandcastle on the beac!