tangent4ronpaul
01-19-2013, 08:16 AM
Federal Reserve officials were largely blindsided as the financial crisis hurtled toward the U.S. economy like a freight train in 2007, according to newly released transcripts.
"The odds are that the market will stabilize," Federal Reserve Board Chairman Ben Bernanke said in 2007 as he misread economy forcast.
http://www.nydailynews.com/news/national/bernanke-missed-signs-crisis-article-1.1243044?localLinksEnabled=false
They didn't see it coming.
Federal Reserve officials were largely blindsided as the financial crisis hurtled toward the U.S. economy like a freight train in 2007, according to newly released transcripts.
Even as they fretted over the health of the financial markets and growing evidence of a mortgage meltdown, central bankers seemed clueless that year to the extent of the havoc it would eventually wreak.
“The odds are that the market will stabilize,” Fed Chairman Ben Bernanke told the committee in August 2007, according to the transcripts, which are released each year with a five-year lag.
William Poole, president of the Federal Reserve Bank of St. Louis, echoed his sentiments at the meeting, saying, “My own bet is that the financial market upset is not going to change fundamentally what’s going on in the real economy.”
Doomed investment bank Bear Stearns had already had to rescue two hedge funds crushed by subprime mortgage loans by then, foreshadowing its near collapse.
Some policy-makers did highlight red flags. Fed Bank of Dallas President Richard Fisher in June cautioned that Bear Stearns’ troubles could mean “enormous risk,” but others brushed off his concern. That month, then-San Francisco Fed President Janet Yellen called the housing market’s troubles the “600-pound gorilla in the room.”
The year had kicked off on a relatively high note, with one Fed official noting in January that the “risk of recession has become much slimmer.”
By late summer, though, that rosy view had begun to unravel. Just after its August meeting, the Fed scrambled to launch what eventually became an unprecedented campaign to jump-start the economy. In September, it began cutting interest rates, slashing them to near-zero by December of the following year.
Even so, Bernanke seemed reluctant to move too quickly. At the September 2007 meeting he declared that, “We are not in the business of bailing out individuals or businesses.”
At the end of the year, the Fed had started to view the situation as increasingly grave and in need of more aggressive action. Still, it seemed not to recognize how far and fast the fall would be.
“I do not expect insolvency or near insolvency among major financial institutions,” Bernanke said at the Fed’s December 2007 meeting, as the economy was already starting to spiral into the Great Recession.
-t
"The odds are that the market will stabilize," Federal Reserve Board Chairman Ben Bernanke said in 2007 as he misread economy forcast.
http://www.nydailynews.com/news/national/bernanke-missed-signs-crisis-article-1.1243044?localLinksEnabled=false
They didn't see it coming.
Federal Reserve officials were largely blindsided as the financial crisis hurtled toward the U.S. economy like a freight train in 2007, according to newly released transcripts.
Even as they fretted over the health of the financial markets and growing evidence of a mortgage meltdown, central bankers seemed clueless that year to the extent of the havoc it would eventually wreak.
“The odds are that the market will stabilize,” Fed Chairman Ben Bernanke told the committee in August 2007, according to the transcripts, which are released each year with a five-year lag.
William Poole, president of the Federal Reserve Bank of St. Louis, echoed his sentiments at the meeting, saying, “My own bet is that the financial market upset is not going to change fundamentally what’s going on in the real economy.”
Doomed investment bank Bear Stearns had already had to rescue two hedge funds crushed by subprime mortgage loans by then, foreshadowing its near collapse.
Some policy-makers did highlight red flags. Fed Bank of Dallas President Richard Fisher in June cautioned that Bear Stearns’ troubles could mean “enormous risk,” but others brushed off his concern. That month, then-San Francisco Fed President Janet Yellen called the housing market’s troubles the “600-pound gorilla in the room.”
The year had kicked off on a relatively high note, with one Fed official noting in January that the “risk of recession has become much slimmer.”
By late summer, though, that rosy view had begun to unravel. Just after its August meeting, the Fed scrambled to launch what eventually became an unprecedented campaign to jump-start the economy. In September, it began cutting interest rates, slashing them to near-zero by December of the following year.
Even so, Bernanke seemed reluctant to move too quickly. At the September 2007 meeting he declared that, “We are not in the business of bailing out individuals or businesses.”
At the end of the year, the Fed had started to view the situation as increasingly grave and in need of more aggressive action. Still, it seemed not to recognize how far and fast the fall would be.
“I do not expect insolvency or near insolvency among major financial institutions,” Bernanke said at the Fed’s December 2007 meeting, as the economy was already starting to spiral into the Great Recession.
-t