Bernanke Says Fed Will Do What It Can to Support Housing

[sailingaway]

Federal Reserve Chairman Ben S. Bernanke said the Fed will take action to speed growth and a rebound in a housing market facing obstacles ranging from too- tight lending rules to racial discrimination.

“We will continue to use the policy tools that we have to help support economic recovery,” Bernanke said today in a speech in Atlanta, Georgia.

Bernanke is pressing on with record easing including a plan to buy $40 billion a month of mortgage-backed securities, aiming to spur growth and reduce a 7.9 percent unemployment rate. He has resorted to unorthodox policies six years after home prices started a plunge that knocked the economy into the longest recession since the Great Depression.

Bernanke said while tighter credit standards after a collapse in the subprime mortgage market were appropriate, “it seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery.”

summary: Here we go again....

more: http://www.bloomberg.com/news/2012-11-15/bernanke-says-fed-will-do-what-it-can-to-support-housing.html

[jllundqu]

What ammo does he have left???

Can't lower interest rates any more!

What's he gonna do? Just go full retard and say unlimited money for everyone!?

[sailingaway]

What ammo does he have left???

Can't lower interest rates any more!

What's he gonna do? Just go full retard and say unlimited money for everyone!?

sounds like requiring high risk loans and buying up mortgaged backed securities -- possibly of those high risk loans. So we the taxpayers, not the banks, would carry that risk.

[jllundqu]

Why can't the MBS/CDS house of cards crash already???

The sooner we have a correction/depression, the sooner we can get back to the task at hand.

[jllundqu]

MBS/CDS = Mortgage Backed Securites / Credit Default Swaps, etc

[newbitech]

FNM is about to request tax payer funds aka bailouts aka inflation..

be nice to be able to finally afford a house right? just in time for it to be pointless to do so. Snake that ate itself.

[tod evans]

"housing market facing obstacles ranging from too- tight lending rules to racial discrimination."

Sounds like section 8 folks now get 3 br. in the country courtesy of you and I..

[MoneyWhereMyMouthIs2]

FNM is about to request tax payer funds aka bailouts aka inflation..

be nice to be able to finally afford a house right? just in time for it to be pointless to do so. Snake that ate itself.



I suspect part of the reason is also so that Fannie Mae can now try to claim standing in foreclosure cases, and they'll be a whole different animal to fight the current criminals who committed mortgage fraud. People watching this foreclosure stuff have predicted this for me, so it's not even a new idea I'm coming up with.

[AuH20]

<proceeds to don sheep fleece> Wait a second! I thought housing rebounded?? That's what Steves Liesman told me. :D

[Confederate]

What ammo does he have left???

Can't lower interest rates any more!

What's he gonna do? Just go full retard and say unlimited money for everyone!?

Interest rates could go negative.

[Lucille]

Bernanke Laments Lack Of Housing Bubble, Demands More From Tapped Out Households
http://www.zerohedge.com/news/2012-11-15/bernanke-laments-lack-housing-bubble-demands-more-tapped-out-households


But perhaps what is most amusing is that the Fed is now accusing none other than the US household for not doing their patriotic duty to reflate the peak bubble. To wit: "The Federal Reserve will continue to do what we can to support the housing recovery, both through our monetary policy and our regulatory and supervisory actions. But, as I have discussed, not all of the responsibility lies with the government; households, the financial services industry, and those in the nonprofit sector must play their part as well." So "get to work, Mr. Household: Benny and the Inkjets, not to mention Chuck Schumer's careers rest on your bubble-reflation skills."

It's our fault, dontcha know. And responsible borrowers and savers must be punished.

How America's Middle Class, And Future Pensioners, Bailed Out A Generation Of Overzealous Homebuyers
http://www.zerohedge.com/news/2012-11-15/how-americas-middle-class-and-future-pensioners-bailed-out-generation-overzealous-ho


In the current Bernanke-Obama-Keynes toxic triangle (defined previously here) economy, blink too long and you will miss the latest bailout.

While 4 years ago, it was America's M.A.D.-hostage taxpaying middle class that had no choice but to fund the trillions in direct Fed cash handouts and guarantees to bail out the banks, in the process saving and preserving the trillions in wealth for America's uber wealthy (the "1%") class, ever since then it has been the government's turn to rescue the country's lower and lower-middle classes (the "47%"), who, with no gun to their heads, decided to splurge during the height of the housing bubble (insurmountable mortgage payments and $0 down notwithstanding) and buy that aspirational McMansion that would make them so much more appealing in the eyes of the next door neighbor (who too could never afford their house in the first place). This has happened courtesy of a progressively more pervasive mortgage forgiveness plan, which has seen the total amount of debt funding a given home purchase shrink little by little each day.

However, since there is no free lunch anywhere, certainly not when a bank's balance sheet is being impaired, like in 2008, someone is once again on the hook for this latest bailout. That someone, not surprisingly, is again America's middle class that lived within its means, that saved money while others splurged, and even put cash away for retirement, handing it over to various Pension investment vehicles.

Guest Post: The FHA Is Blowing Up: Bad News For The Housing Market
http://www.zerohedge.com/news/2012-11-15/guest-post-fha-blowing-bad-news-housing-market


A very important article came out from the Wall Street Journal yesterday titled “FHA Nears Need for Taxpayer Funds,” and it outlines the serious financial problems facing the Federal Housing Administration. For those that are unaware or need a refresher, the FHA has been the key element to the phony “housing recovery” the government has been trying to create. In the wake of the collapse of 2008, Fannie Mae and Freddie Mac blew up and what was left to pick up the pieces was the FHA. No private player would issue loans with down payments of 3%, but this was no problem for the FHA!

Interestingly enough, a lot of the subprime borrowers that blew up the housing market the last time became the primary customers of the FHA. Let’s see, 3% down and subprime borrowers…what could possibly go wrong?!
[...]
This is a big deal. The FHA is already in trouble despite a miraculous “housing recovery” and we haven’t even hit a severe cyclical economic slowdown yet, which is almost certain to occur in 2013. What shambles do you think the housing market will be in once that happens and the last backstop to housing is broke? You can kiss this “housing recovery” goodbye. I think home prices nationally could fall 25%+ from here.

[Occam's Banana]

A really smart guy said something once about the definition of insanity ...

[Cap]

http://i164.photobucket.com/albums/u11/CapRuger/redpoppedballoon.jpg
All the kings horses and all the kings men...

[Ben Bernanke]

I'm just here to help

[Brooklyn Red Leg]

Like someone else said, at this point just go ahead and print the fuck out the money and hand it out to everyone. Let the system collapse and be done with it. Better the short term burn than the impending long sizzle....

[Odin]

Why do these idiots think that raising prices is good for the economy. I want lower prices! In fact in late 2008 and 2009 during the 'recession' when the price of goods (especially oil and housing) tanked, that was good for the economy, until they blew the bubble up again.

[Odin]

Like someone else said, at this point just go ahead and print the fuck out the money and hand it out to everyone. Let the system collapse and be done with it. Better the short term burn than the impending long sizzle....

Yeah but it depends how we let it collapse. Going over the fiscal cliff, raising interest rates, and trying to balance the budget would be a much better collapse than continuing to spend spend spend and having a monetary crisis. I would much rather have a proper deflationary recession with prices falling back down to earth and the market readjusting. There are actually a number of good things about that kind of recession. Nothing at all would be good about a dollar crisis.

[AuH20]

Why do these idiots think that raising prices is good for the economy. I want lower prices! In fact in late 2008 and 2009 during the 'recession' when the price of goods (especially oil and housing) tanked, that was good for the economy, until they blew the bubble up again.

Bernanke's prime directive is to make certain deflation never occurs. He's stated this several times. They're going to ride this one out to the end on the back of digitally created dollars.

[BAllen]

Yeah but it depends how we let it collapse. Going over the fiscal cliff, raising interest rates, and trying to balance the budget would be a much better collapse than continuing to spend spend spend and having a monetary crisis. I would much rather have a proper deflationary recession with prices falling back down to earth and the market readjusting. There are actually a number of good things about that kind of recession. Nothing at all would be good about a dollar crisis.

Exactly!
We need housing prices to fall to more affordable levels. People are making less money due to the manufacturing loss, where they are more into lower wage retail jobs.

[Brian4Liberty]

Bernanke is pressing on with record easing including a plan to buy $40 billion a month of mortgage-backed securities

Summary:

Bernanke creates money, buys toxic mortgage-backed securities from JP Sachs. In return, JP Sachs buys US Treasuries with the proceeds. The Fed can now sit on those mortgages, and make sure that those houses do not go back into the general housing market, thus constraining supply, and artificially propping up prices.

[BAllen]

Summary:

Bernanke creates money, buys toxic mortgage-backed securities from JP Sachs. In return, JP Sachs buys US Treasuries with the proceeds. The Fed can now sit on those mortgages, and make sure that those houses do not go back into the general housing market, thus constraining supply, and artificially propping up prices.

Kinda reminds me of the DeBeers diamond scam.

[Brian4Liberty]

Kinda reminds me of the DeBeers diamond scam.

Yep. Manipulating supply is much easier and common than attempting to effect demand.

[Brooklyn Red Leg]

We need housing prices to fall to more affordable levels. People are making less money due to the manufacturing loss, where they are more into lower wage retail jobs.

Of course, but that ain't gonna happen as long as we have a distorted market via the Central Bank.