Top Economist Mishkin:  Worse Than the Depression

Economics scholar and former Federal Reserve Governor Frederic Mishkin says the shock that continues to rip through the nation's economy is actually worse than what was felt during the Great Depression.

"The difference is, we have people on the ball," the Columbia University professor told CNBC.

Mishkin said he was impressed by the way his former colleagues at the Fed handled crises.

"During all these episodes...everybody stayed very cool, calm, and collected," he recalled. "Chairman Bernanke is someone who sits down, is very analytical, thinks through, doesn't get excited, just, 'Let's do the job,' the staff operated that way, the rest of the board operated that way." (Watch the accompanying video for more on what Mishkin has to say on the economy...)

That said, he believes it is appropriate for the Federal Reserve to turn the management of the crisis over to Congress and the Administration.

"The Federal Reserve is not supposed to be doing fiscal policy," he said. "In fact, when you're spending taxpayers' money in a big way, it's got to be dealt with by the legislative branches and the executive branch."

The key, he explained, is timing.

"When things happen, you have to act very quickly," he said. "The problem is, if you try to act well before anything happens—particularly in terms of any bailouts—then in fact you create incentives for people to take on excessive risk."

And the stakes are large, he warned.

"The reality is that we're in a situation that if Wall Street falls apart, Main Street is going to get killed."

He's big on Bernanke, but he's also impressed with the administration's point man.

"We have Hank Paulson, who understands what Wall Street is all about, and in fact the dangers that are lurking there, and the need for speed, and the ability to work with Congress," Mishkin said. "We saw that during the stimulus package; it was surprising how quickly that was done; it was done in a reasonable way; it's very important to have people like that in charge right now."