Chairman of the Federal Reserve Ben Bernanke declared last night he expects to see the US recover from recession by the beginning of 2010.

In a frank interview with CBS, Mr Bernanke explicitly stated the end was in sight.

“We’ll see the recession coming to an end probably this year. We’ll see recovery beginning next year. And it will pick up steam over time,” he said.

“This decline will begin to moderate and we’ll begin to see levelling off. We won’t be back to full employment. But we will see, I hope, the end of these declines that have been so strong in a last couple of quarters.”

The Fed chairman, who is the first in his position to give a formal, on the record interview in nearly 20 years, warned that the economy wasn’t completely out of the woods yet.

“Recovery is not going to happen until the financial markets and the banks are stabilised,” he said.

“The biggest risk is that, you know, we don’t have the political will. In which case we can’t count on recovery.”

Mr Bernanke said the risk of depression had been “averted” and the bailout TARP legislation passed by the Congress had prevented financial meltdown.

“Now the problem is to get the thing working properly again,” he said.

The interview comes a year after the Fed’s $30 billion rescue of Bear Stearns began a series of bailouts leading to a doubling of the Fed’s assets over the past year to $1.9 trillion, and a few days after it emerged that AIG’s London staff will share bonuses of $450 million, despite crippling the company with huge losses.

“The single one that makes me the angriest, that gives me the most angst, is the intervention with AIG. Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong, we had a situation where the failure of that company would have brought down the financial system,” Mr Bernanke said.

“It’s absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets.”

Mr Bernanke admitted that the Fed could have done a better job of overseeing banks, but that no banks would fail on his watch.