Bernanke and the officials of the Federal Reserve Said They Had Not Been Able to Gauge the Severity of the Forthcoming Foreclosure Crisis
By odihost on March 27th, 2012On 26th March it was Ben Bernanke’s first presiding over a meeting of Federal Open Market Committee as the chairperson of the Federal Reserve. At that meeting Bernanke was the only one among the participating officials who expressed some concerns about the housing boom. Within a year the bubble burst sending the economy spinning downwards.
From the records of 2006 meetings at the first one held in March it is noted that Ben Bernanke was cool towards any potential crisis â was not unduly concerned at the record sales and spiking housing prices. At the second conference he continued to be more or less confident referring to the orderly decline in housing segment. But at the June meeting he had become more cautious that “asset price correction” required to be watched. He had said, “Like any other price asset-price correction, it’s very hard to forecast, and consequently it’s an important risk and one that should lead us to be cautious in our policy decisions”.
At the third meeting in September 2006 Bernanke seemed really anxious about the impact the housing slowing down would have on the general economy. He had said, “I don’t have quite as much confidence as some people around the table â that there will be no spillover effect”.
At that time Timothy Geithner was the president of Federal Reserve at the New York branch. He displayed strong confidence that the troubles would be weathered by the economy and would not greatly affect spending by consumers and in business. At the meeting of FOMC in 2006 September he said, “We just don’t see troubling sings yet of collateral damage and we are not expecting much”.
The FOMC meetings were attended by the board members of the Federal Reserve and the presidents of the 12 branches in various regions. None of them showed signs that they were worried about any impending danger of the forthcoming severe recession and the vanishing of over jobs numbering over 8 million.
Bernanke and the officials of the Federal Reserve said they had not been able to gauge the severity of the forthcoming foreclosure crisis that led to such grave consequences.
In the final meeting the documents showed that Bernanke continued to nurse hope about the recovery of the economy where the landing would be soft, inflation would be cool and the situation would not explode into recession. These comments were made only a year prior to the onset of the Great Recession.
Source: http://www.articlesbase.com/finance-articles/bernanke-and-the-officials-of-the-federal-reserve-said-they-had-not-been-able-to-gauge-the-severity-of-the-forthcoming-foreclosure-crisis-5773798.html
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