Federal Reserve

  • 05 Dec 2008 at 10:57 AM

Fed Searches Control Room For More Buttons

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Gentle signs of Japa-nic are beginning to show, don’t you think? What with the Fed poking around and toying with things like buying up Treasuries (drives the yields down you know) and convincing the Euro folk that “cool kids lower rates.” (New Zealand is very unpopular right now).

In another sign of its focus beyond conventional policy, Mr. Bernanke on Thursday called for aggressive new actions by the government to help homeowners avoid foreclosure. One approach, he said, could involve having the U.S. buy delinquent mortgages and refinance them.
He called for revisions to a federal program called Hope for Homeowners that might encourage more participation. It is designed to help borrowers refinance with the help of the Federal Housing Administration.

Fed Weighs Its Options as Europe Cuts Rates [The Wall Street Journal]

  • 03 Dec 2008 at 10:33 AM

Infiltrators

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Continuing the pattern of infiltration by Goldman of key administration positions, and siphoning off former key administration positions, Gerald Corrigan will be Chairman of Goldman’s bank holding company.

In tapping the formidable Mr. Corrigan as chairman, Goldman is reaching out to a man that many consider among the best presidents the New York Fed has had.
During his tenure, Mr. Corrigan was an activist figure who had no trouble telling heads of big banks to come up with swift action plans to improve balance sheets in the 1990 downturn.
Former colleagues recall how he summoned Citibank executives and ordered them to eliminate dividend payments that year.

It is not entirely possible that this is a defensive move, pulling the troublesome Mr. Corrigan off of the market (he was rumored to be considering a departure from Goldman) before he lands somewhere he could continue rocking the boat. Either way, regulators are probably more likely to go light on the newly formed shell with this kind of leadership at the top.

  • 01 Dec 2008 at 2:23 PM

Fed Indicates That Fed May Consider Ability To Act When Acting

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It almost feels like Greenspan is back.

“Although conventional interest rate policy is constrained by the fact that nominal interest rates cannot fall below zero, the second arrow in the Federal Reserve’s quiver — the provision of liquidity — remains effective,” Mr. Bernanke said.

Bernanke: More Rate Cuts ‘Certainly Feasible’ [The Wall Street Journal]

  • 30 Oct 2008 at 11:35 AM

I Am William Ackman, And I Approve Of This Message

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Certain seals-of-approval have vastly diminished in the last 36 months. Rumsfeld’s Iraq suggestions: low approval. Fannie Mae policy papers: low approval. Dick Fuld’s Feng Shui guide: low approval.
Others, however, have grown rather substantially in the public eye. Your mother’s paranoia about debt: high approval. Your father’s advice to become a doctor and ignore that banking thing: high approval. William Ackman’s advice on anything: high approval.
So when Ackman gives the Fed Reserve a gold star, well, you just want to smile at Beard after weeks of cat-calling him. Don’t you?

What I like is I think stocks are cheap and I think the Federal Reserve has taken some very important steps that will improve liquidity–the banking system–and that in turn will help the economy,” Ackman said on CNBC. “I think the most significant thing the Fed has done is committed to putting $250 billion in the banking system. I think they’re doing it the smart way.

Fed Taking Measures ‘the Smart Way’: Ackman [CNBC]

  • 21 Oct 2008 at 1:48 AM

DealBreaker Afterdark: Bernanke Endorses Obama

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A bit obnoxious as a headline for the Wall Street Journal (and of us for telegraphing it), no? Really, the entire piece makes this entry more about the continuing slide in Wall Street Journal quality than any political statement or position. (Actually, we find it quite amusing what some of the readers here think our politics are, though).
It should go without saying that the Journal is being beyond manipulative here. It is a statement that we are simply annoyed rather than outraged. Nothing the Journal does anymore seems to surprise us.

Perhaps Mr. Bernanke’s blunderbuss political intrusion will win him more Democrat friends, and maybe even Mr. Obama’s goodwill. To the rest of the world, he has harmed the Fed and made himself less credible.

Bernanke Endorses Obama [WSJ]

  • 30 Sep 2008 at 10:08 AM

Curing The Liquidity Solvency Crisis

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sumo.jpgWe have pointed out a few times that identifying a liquidity crisis and distinguishing it from a solvency crisis is something like an essential precursor to develop and execute a rescue plan (or to adopt “Plan B” if the first rescue plan fails to return the country and its many mistresses to the style to which they have grown accustomed).
Forgive us for nitpicking, but either market actors are so beyond reliable or rational function that they cannot bear price discovery, or solvency and liquidity are in equal measure gummed up all through the works.
“Quietly” injecting $650 billion of cash into the system, as the Fed decided to this week, may delay total chaos and prevent cats and dogs from living together before Easter, but it doesn’t solve the basic issue faced by most (heavily leveraged) finance institutions: their liabilities may well significantly exceed their (still deteriorating) assets. As if that’s not enough, almost no one knows how long and to what degree insolvency has been sloughing rotten skin off all over the new industrial ply carpet in various regional banks. Hopefully, this will limit the egg-splash to the first two rows around the dohyo, but certainly there is going to be some breakage. Here’s hoping one of the wrestlers doesn’t teeter over into the spectators.
Fed Pumps Further $630 Billion Into Financial System [Bloomberg]

  • 26 Aug 2008 at 3:02 PM

The Fed-Fred Trade, Preferred Stock Edition

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Banks who bought short-term bonds sold yesterday by the government chartered mortgage giant Freddie Mac may have also boosted their own balance sheets by strengthening Freddie’s preferred stock.

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