Federal Reserve System

Worth Reading
August 13, 2009

Retail sales drop despite cash-for-clunkers. Ford ramps up production. Is the Fed too optimistic about consumer spending? Does India have a microlending bubble? How UPenn's money managers became the envy of the Ivy League.

Sachs Appeal
August 12, 2009

Should Tim Geithner's Wall Street consigliere make us queasy?

Worth Reading
August 10, 2009

Nate Silver says the unemployment rate probably won't hit 10%. Sugar prices at a 28-year high. The Fed is concerned about commercial real estate. The NYT explains where things stand in the health care fight. Can't find a job in the U.S.? China might be the place for you. Why a company might short its own stock.

Credit Conditions In The Absence Of Consumer Protection
August 10, 2009

Even some of our most sophisticated commentators doubt a link between consumer protection and any macroeconomic outcomes. Consumer protection, in this view, is microeconomics and quite different from macroeconomic issues (such as the speed and nature of our economic recovery). Officially measured interest rates are down from their height in the Great Panic of 2008-09 and the financial markets, broadly defined, continue to stabilize. But are retail credit conditions, i.e., the terms on which you can borrow, getting easier or tougher? On credit cards, there's no question: it's getting more expen

Is The Fed's Buying-spree Ending?
August 05, 2009

That's what former Fed Governor Larry Meyer thinks. From Bloomberg: The Federal Reserve is likely to let its plan to purchase up to $300 billion in U.S. Treasuries expire in mid-September as scheduled, and its decision may be announced next week, former Fed Governor Laurence Meyer said. Plans to buy as much as $1.25 trillion of mortgage-backed securities and $200 billion of federal agency debt expire at the end of the year, so the decision on whether to extend them may be delayed, Meyer, vice chairman of St. Louis-based Macroeconomic Advisers LLC, wrote in a report released yesterday.

Summers On Consumer Financial Regulation
August 04, 2009

Judis is disappointed that Tim Geithner didn't chew out Ben Bernanke for refusing to give up the Fed's role in regulating consumer financial products. I agree--I wish Geithner would have reamed out Bernanke the same way he reamed out critics of the plan to have the Fed handle systemic risk regulation. But it's worth noting that at least one top administration official is on record strongly supporting an independent consumer financial products regulator.

What Did Geithner Say To Bernanke?
August 04, 2009

My esteemed colleague Noam Scheiber cites today’s report from the Wall Street Journal about Secretary of the Treasury Tim Geithner blowing his top at the heads of the various financial agencies, including the Federal Reserve, for quarreling over who will have jurisdiction for regulating different financial services.  Interestingly, Geithner is reported to have chastised the FDIC’s Sheila Bair and SEC chairwoman Mary Schapiro for objecting to the administration’s plan to vest most regulatory functions in the Federal Reserve.  Geithner is not reported to have bawled out Fed chairman Ben Bernanke

Two Cheers For Bernanke's Political Instincts
July 27, 2009

Like the Times' Edmund Andrews, I think Ben Bernanke has done an impressive job defending and demystifying the Fed's actions for average voters at a time that's pretty ripe for a populist anti-Fed backlash. (Among other things, Ron Paul's efforts to subject the Fed's conduct of monetary policy to periodic audits would be an absolute disaster were it to come to pass--you can quibble with the bank bailouts, but almost no one thinks Bernanke mishandled the setting of interest rates during the financial crisis.

Do Delinquent Mortgages Heal Themselves?
July 21, 2009

Barbara Kiviat points to some testimony from Alan White of Valparaiso University which takes issue with that paper by economists at the Fed and MIT I wrote about a couple of weeks back. In that study, reseachers argued that a big reason we're seeing so few loan modifications -- despite government incentives -- is that delinquent home owners might self-cure, i.e. catch up on their payments.

Bernanke On The Wsj Op-ed Page
July 21, 2009

I'll get to his congressional testimony a little later in the day. But, in the meantime, the Journal op-ed includes some lucid explanations for two issues we keep returning to on The Stash. First, why the expansion of the Fed's balance sheet isn't  currently inflationary even if it will be when the economy revives: When the Fed makes loans or acquires securities, the funds enter the banking system and ultimately appear in the reserve accounts held at the Fed by banks and other depository institutions. These reserve balances now total about $800 billion, much more than normal.