Category Archives: Federal Reserve

Asian Countries Intervene to Prop Up Greenback (Dollar Bind Edition)

An unannounced but evidently coordinated effort to arrest or at least slow the fall of the dollar is underway. The Financial Times indicated that Asian central banks were aggressive dollar buyers on Thursday, but the information came via currency traders rather than an official pronouncement. Thailand, Malaysia and Taiwan made substantial purchases; Hong Kong and […]

Securitization Drought Exposes Policy Bind, Threatens Recovery

The New York Times has a good update on the progress, or more accurately, lack thereof, in the efforts to return to normalcy in the credit markets. The story highlights the fact that the securitization markets, to the extent they are operating, are heavily dependent on government intervention and it does not appear likely that […]

Banks Under-reserving for Commercial Real Estate Losses

There has been a peculiar disconnect between the “the crisis is over, on with the recovery” drumbeat of news, and the sobering reality that a good deal of credit bubble overhang still remains to be dealt with. One of the biggest areas is commercial real estate. Various experts, including Apollo Management’s Leon Black warned of […]

Fed’s Preferential Treatment in Lehman BK Highlights Ambiguity of its Status

It must be nice to be like the Fed and be able to chose when you are public or private to suit your convenience. Many readers like to rail that the Fed is a private institution, but it has a weird public/private structure that has the nasty effect of putting it beyond the reach of […]

Guest Post: How Well Has The Federal Reserve Performed for America?

By George Washington of Washington’s Blog. How well has the Federal Reserve performed for America? Mainstream pundits, of course, say that Bernanke has saved the world . . . . but they said the same thing about Greenspan. So let’s look at the actual historical record to determine how well the Fed has done. Initially, […]

Guest Post: If Credit is Not Created Out of Excess Reserves, What Does That Mean?

By George Washington of Washington’s Blog. We’ve all been taught that banks first build up deposits, and then extend credit and loan out their excess reserves. But critics of the current banking system claim that this is not true, and that the order is actually reversed. Sounds crazy, right? Certainly. But as PhD economist Steve […]

Fed Plays Politics on Banker Pay

The Wall Street Journal has a headline that would warm the cockles of any populist’s heart: “Bankers Face Sweeping Curbs on Pay.” And even more impressive, who is going to rein in banker compensation? The Fed. That alone should tell you there is less here than meets they eye. Let’s look at the outline of […]

Quelle Surprise! Regulators Starting to Worry Re Bank Commercial Real Estate Exposures

Let’s see, Leon Black of Apollo Management, which is a very savvy real estate player, warned of a coming “black hole” in commercial real estate six months ago. US bank regulators seem to be taking warnings of his sort seriously only now. The Fed is poking its nose into the portfolios of some banks, oddly […]

Guest Post: “Assessing the Recent Performance of the Fed”

By Richard Alford, a former economist at the New York Fed. Since them, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. Evaluating the recent performance of the Fed is not a straight forward exercise. The turmoil in the financial system, […]

Guest Post: “The Fed has never believed in sunshine as a disinfectant”

By DoctoRx, who writes at EconBlog Review: In The Fed, the veteran journalist Martin Mayer has written a real-time prequel of the Great Financial Crisis (“GFC”) of the past two years. People may find it a good read or reread because historians have a point of view. If Mayer were a cheerleader for Alan Greenspan’s […]

Is economic boom around the corner?

Submitted by Edward Harrison of Credit Writedowns. Back in February, I asked you if we were experiencing a recession or depression. A plurality said it was a depression with a small ’d.’ I agreed and went on to explain why. Since then, things have changed and we seem to be on the verge of what […]

The Financial Times Joins Fed Flattery Parade: “Fed makes $14bn profit on crisis loans”

I know it may be hard for most readers to believe this, but once upon a time, the New York Times really was a very good paper. I trace its demise to its decision to become a national newspaper, which took place in the later 1990s, instead of a New York city newspaper that set […]

Barney Frank Calls for Audit of Fed, Limits on Emergency Powers

Barney Frank is joining the “rein in the Fed” party, with a key distinction: he wants to steer clear of messing with the central bank’s independence in monetary affairs. Thus, the call for a Fed audit ex that activity is not surprising. However, a possible new front is that Frank also wants to place some […]

Quelle Surprise! Fed Uses Scare Tactics to Try to Forestall Loan Disclosures

In a show of how much our government thinks that serving the financial oligarchy, rather than the citizenry, is its prime duty, the Fed is fighting to stop the court-ordered disclosure of who borrowed money under the Fed’s various lending facilities. The reason I lump the Fed in with “the government” is that the central […]

Labor Leader Chosen to Head of New York Fed Board of Directors

Joseph Stiglitz has said that labor should have a voice in the setting of interest rate policy. Is this change at the New York Fed, teh appointment of the AFL-CIO’s Denis Hughes as the replacement to ex Goldman co-chairman Steve Friedman as chairman of the New York Fed, a step in that direction? If it […]