Ben Bernanke & US Fed 01 (May 08 - Nov 10 )

[kennynah]

tinpeng : welcome back

[millionairemind]

Fed Minutes Show Division on Emergency Steps

By DAVID STREITFELD and JACK HEALY
Published: January 6, 2010

Despite extensive government intervention in the housing market, some policy makers at the Federal Reserve are worried that even more might need to be done.

Concern over housing deepened Wednesday with the release of new data showing that long-term interest rates were rising rapidly from their historic lows, while mortgage applications to purchase houses were falling. Applications are now at their lowest level in 12 years.

Other signs of stress in real estate have become apparent in the last few weeks, although most economists say any downturn will be relatively mild.
http://www.nytimes.com/2010/01/07/busin ... ref=global

[millionairemind]

Economic Scene
Fed Missed This Bubble. Will It See a New One?

By DAVID LEONHARDT
Published: January 5, 2010

http://www.nytimes.com/2010/01/06/busin ... hardt.html

[millionairemind]

Fed warned on interest rates

By Krishna Guha in Washington

Published: January 8 2010 00:12 | Last updated: January 8 2010 00:12

Tom Hoenig, president of the Kansas City Fed, on Thursday warned against keeping rates too low for too long.

“Experience both in the US and internationally tells us that maintaining large amounts of stimulus over an extended period risks creating conditions that lead to financial excess, economic volatility and even higher unemployment at some point in the future,” he said. Mr Hoenig rejected Mr Bernanke’s argument that the Fed decision to keep rates low after the dotcom crash did not contribute meaningfully to the housing and credit bubble. “Low interest rates contributed to excesses,” he said.
http://www.ft.com/cms/s/0/74c23e0c-fbe8 ... ck_check=1

[winston]

Investors bet Fed will hold interest rates low

Interest rates mostly slip as Atlanta Fed president predicts inflation will remain in check

Interest rates mostly slipped in the bond market Monday as expectations grew that the Federal Reserve won't lift borrowing costs anytime soon.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech that interest rates are likely to remain low until a recovery in the economy shows it has enough momentum, according to a copy of his remarks.

Lockhart also said he expects inflation will remain tame for the "immediate future." Rising prices are a concern for bond investors because they chip away at returns of fixed-income investments.

The yield on the benchmark 10-year Treasury note, which is tied to interest rates on mortgages and other consumer loans, slipped to 3.82 percent from 3.84 percent late Friday, while its price rose 3/32 to 96 11/32.

Meanwhile, longer-term Treasury prices fell after a Treasury Department auction of $10 billion in 10-year Treasury inflation protected securities drew solid demand. Prices often fall as new supply is added to the market.

The yield on the 30-year bond edged up to 4.73 percent from 4.72 percent as its price fell 9/32 to 94 10/32.

Dan Alpert, managing partner at Westwood Capital in New York, doesn't expect much action from the longer-duration end of the Treasury market.

"I believe that as long as you see auctions continue to go well there is no reason to believe that the market will do anything but trade sideways," Alpert said.

The modest moves followed a government report Friday that employers cut 85,000 jobs in December. The job cuts were far deeper than forecast and even with a revised gain in jobs for November, investors remain concerned about the prospects of an economic recovery.

In other trading, the yield on the two-year Treasury fell to 0.95 percent from 0.99 percent. Its price rose 2/32 to 100 3/32.

The yield on the three-month T-bill slipped to 0.03 percent from 0.04 percent. Its discount rate stood at 0.04 percent.

Source: AP News

[millionairemind]

Isn't all this play money since they can print money at will??

And they bot $1.3T worth US government debt and mortgage back securities in 2009???

Jan 12, 2010
US Fed earned $62b in '09

WASHINGTON - THE US Federal Reserve made record profits in 2009 and will return US$45 billion (S$62.6 billion) to the US Treasury, after its efforts to prop up the economy created a windfall for the government, the Washington Post reported.

The US$45 billion reflects the highest earnings in the 96-year history of the US central bank, the newspaper reported on its website late on Monday. The figure was obtained by calculations based on public documents, the Post said.

The Fed funds itself from its own operations and returns its profits to the Treasury. The largest previous refund to the Treasury was US$34.6 billion in 2007, the Post said.

The report said much of the Fed's higher earnings were sparked by the central bank's aggressive programme of buying bonds to push interest rates down and stimulate growth.

'By the end of 2009, the Fed owned US$1.8 trillion in US government debt and mortgage-related securities, up from US$497 billion a year earlier,' the newspaper reported. It said interest income on the investments was a major source of Fed profits. The central bank also made money on its emergency loans and on special programmes to prop up lending.

Even though it had reported billions of dollars of decline in the value of loans made to bail out investment bank Bear Stearns and insurer American International Group, the Fed received US$4.7 billion in interest payments from those loans in 2009, the Post said. -- REUTERS

[winston]

Maybe the Fed should be turned into a profit-making entity since it's so profitable

Reminds me of the Central Bank of a neighbouring country. They started making money on their currency bets. So they started to take bigger and bigger bets. Then it all blew up in their face and the country lost billions of US$.

[millionairemind]

Jan 13, 2010
Calls for inquiry into Fed role
WASHINGTON - CALLS for an inquiry into whether the New York Federal Reserve improperly urged insurer AIG to limit discussions of payments to banks grew on Tuesday as a senior lawmaker issued a subpoena for fuller disclosure.

The head of the House of Representatives Oversight Committee, Rep Edolphus Towns of New York, said the subpoena to the New York Fed 'will provide the committee with documents that will shed light on how and why taxpayer dollars were used for a backdoor bailout'.

Mr Timothy Geithner headed the New York Fed until being nominated in late 2008 by President Obama to become Treasury Secretary. Lawmakers are waiting for Treasury to say whether Mr Geithner will testify on the AIG issue next week.

Separately on Tuesday, Republican Senator Jim Bunning of Kentucky, a member of the Senate Banking Committee, said an email exchange released on Jan 7 that showed the New York Fed advised American International Group Inc AIG.N to withhold information about its derivatives counterparties from its Securities and Exchange Commission filings raised serious issues.

'Because the information withheld appears to be material information about the financial condition of AIG and the value of the company, these actions may constitute a serious violation of the securities laws,' Mr Bunning said in a letter to SEC Chairman Mary Schapiro.

The SEC declined to comment. -- REUTERS

[winston]

What's happening to Helicopter Ben ?

There's so much discussion that he cant even last the week-end ..

Well, he was not able to see the financial crisis but he did increase liquidity at the crucial moment..

I dont agree with them on bailing out the Investment bankers ( thru AIG ) and I think he should have taken off some liquidity a few months ago when the market was strong.

Now that the markets are weak, he cant take off those liquidity for a while.

And the US may now be forced to increase interest rates steeply if the rest of world suddenly stops buying their debts...

[millionairemind]

Ever noticed all this inquiry, curbing bank sizes, fault finding etc...all came at a time when Obama's popularity hit a new low?