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Ben Bernanke said on Wednesday that he had an exit strategy from the U.S. central bank's recent massive monetary expansion that will keep inflation under control as the economy recovers. As he had on Tuesday, Bernanke also told lawmakers he saw no need for the United States to nationalize banks, and he lifted Wall Street shares after he assured there was no plan for the government take over Citigroup. A severe U.S. recession has brought price pressures sharply to heel and the Fed chief said that inflation would not be a problem for the next couple of years, but would...

In an effort to attract private capital back into the banking system, the Treasury plans to allow firms to introduce preferred shares that can be converted into common stock as part of its new Capital Assistance Program (CAP). According to the Treasury Department, the program allows banks the "opportunity to turn first to private sources of capital, should additional capital buffers be deemed necessary for a financial institution." The preferred shares will carry a 9% dividend yield and can be converted into common equity at a 10% discount to the price, the Treasury said. Securities that have not been converted...

Federal authorities do not see any advantage to nationalizing large banks since a return to profitability can be achieved through a combination of strong regulations of how rescue funds are used, and greater transparency on financial institutions, according Fed Chairman Ben Bernanke. During his semi-annual testimony to the U.S. Banking Committee on Tuesday, Bernanke said the U.S. economy cannot recover without a stabilization of the financial system, pointing to the failure of Franklin D. Roosevelt's New Deal, which failed to stabilize the financial system. In addition to the previously announced public-private sector partnership between government and large financial institutions and...

x-Fed Chief to Lead New Economic Panel of Outside Experts Who Will Brief Obama President-elect Barack Obama appointed former Federal Reserve Chairman Paul Volcker on Wednesday to be the chairman of a new White House advisory board tasked with helping to lift the nation from recession and stabilize financial markets. University of Chicago economist Austan Goolsbee, one of Mr. Obama's longest-serving policy advisers, will serve as the board's staff director, along with his duties as a member of the White House Council of Economic Advisers. Members of the panel will be drawn from a cross-section of citizens outside the government,...