The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Ben Bernanke Speaks (Q&A , post FOMC 1430 hrs March 20, 2013)

English: A frame from a screencast from the US...

English: A frame from a screencast from the US House Financial Committee full committee hearing “An Examination of the Extraordinary Efforts by the Federal Reserve Bank to Provide Liquidity in the Current Financial Crisis which took place Tuesday, February 10, 2009, 1:00pm, 2128 Rayburn House Office Building. The frame shows Chairmen Ben Bernanke responding to a question posited by John E. Sweeney Full Committee (Photo credit: Wikipedia)

A rather non conventional start to the presser with Ben Bernanke being cornered on how big the change in Employment situation and inflation would actually cause the Fed to reduced the buying program both for Agency MBS and Long Treasuries


The questioners finally return to Cyprus after a good three questions and clarifications on the size of improvement to trigger change in the buying program. Cyprus is obviously a very small issue and unlikely to nettle the Fed

Bernanke clarifies that his comments to Liz Warren were not meant to say TBTF is a non issue and that it will be continually addressed.

Bernanke also shrugs off a question on his term

Ben mentions he “comes from a small town in North Carolina” which had an unemployment rate of more than 15% till it improved recently in a serious response to explain his commitment to a substantial reduction in unemployment in measuring efficacy of asset purchases

Bernanke suggests new Capital surcharges as a tool to limit TBTF risk

“Should Lev 4 Credit Scores rising to above 700 be regarded as successful transmission of monetary policy”

Bernanke admits Credit quality may have tightened more than desirable, some of it also because underwater mortgages are reducing and so more people are counted as creditworthy now. Go Ben!

We are not counting our success in terms of the stock market we are counting it in terms of employment and price stability

Comments on Sequestration and Social security rollbacks: Our analysis more or less meets what is presented by the CBO in terms of the extent of difference made and is not enough to conclude if employment will deteriorate because of these fiscal measures or if it will not be a completely satisfactory recovery

Comments on reducing GDP forecasts while also reducing unemployment: Acknowledges the disconnect in the markets in terms of future growth and reconfirms providing support to the Economy till it (question references “Juergen’s law”)

Why Fed does not share info on the Severely Adverse scenario ? Agrees that is the real test and mentions it is just an extension of the adverse scenario and that the Fed has done some work on the impact of interest rates.

exited conference cast at 3:08 pm




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