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value | Date int64 1.98k 2.01k | Text stringlengths 2 27.1k | Token_count int64 1 5.57k |
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fomc | 2,008 | Like that prompt reversal. | 5 |
fomc | 2,008 | Oh, interesting. | 4 |
fomc | 2,008 | It was very much a sharp V. | 8 |
fomc | 2,008 | President Evans. | 3 |
fomc | 2,008 | I just wanted to point out that the reason I asked the question about how you think about the exit strategy is that, since we are putting a lot of discussion weight on the reversal, it is going to color how you think about the next move potentially, if not today then another day. So I think it brings the future into th... | 71 |
fomc | 2,008 | President Lacker. | 4 |
fomc | 2,008 | If I could just continue the dialogue with Governor Kohn. It has been observed by some that the past two recessions differ from previous post-war recessions in some key dimensions, and some have drawn the conclusion that it is the changing nature of the business cycle after the Great Moderation. Both have been characte... | 188 |
fomc | 2,008 | May I answer that? | 5 |
fomc | 2,008 | Well, I asked Governor Kohn, but if he gets to respond. | 15 |
fomc | 2,008 | I will follow Don. | 5 |
fomc | 2,008 | I think we are really getting into the policy discussion right now, and the issue, really, will be the headwinds, the financial market restraint. So it is reasonable to think that we are facing at least 25 mile an hour headwinds. I also think that it is going to take a while for the headwinds to abate. It is going to t... | 155 |
fomc | 2,008 | For follow-up before President Geithner responds, to the extent that we place greater likelihood on that, should these simulations suggest that we should take that into account in how rapidly we cut now? | 39 |
fomc | 2,008 | I don't think so. I would just point out that with the 1990-91 episode, inflation after the recession--after the whole episode was over--was significantly lower than in the period before it. So if there are headwinds that are bringing the economy below potential and are causing high unemployment, for example, there has... | 147 |
fomc | 2,008 | I really couldn't tell, President Lacker, what inference you were going to draw from that. But I would just reinforce the point that, if you are more worried and uncertain now about the magnitude of the headwinds and the duration, I think it has to mean that you err on the side of going lower sooner. But the main point... | 171 |
fomc | 2,008 | Could we start our policy round? President Pianalto. | 11 |
fomc | 2,008 | Thank you, Mr. Chairman. Like the Greenbook, my projection for the real economy incorporates a sharp decline in the equilibrium real fed funds rate. Given the large risks facing the real economy, I think we need to take precautions against having a restrictive fed funds rate target. I think a 50 basis point cut in the ... | 556 |
fomc | 2,008 | Thank you. President Hoenig. | 7 |
fomc | 2,008 | Thank you, Mr. Chairman. Given the discussion I have heard so far, it is apparent to me that we will most likely move to a 3 percent fed funds rate today. If we do so, I think we should be prepared to stop at this point and let the market work through the disturbances that only time and market adjustments will correct.... | 677 |
fomc | 2,008 | Thank you. President Rosengren. | 8 |
fomc | 2,008 | Thank you, Mr. Chairman. I support alternative B, though I think a case can be made for alternative A. The Boston model indicates that even after a 50 basis point reduction, we still need more easing to return to an economy with both full employment and inflation below 2 percent. Taking out insurance against more-sever... | 332 |
fomc | 2,008 | President Plosser. | 5 |
fomc | 2,008 | Thank you, Mr. Chairman. Since September, this Committee has lowered the federal funds rate 175 basis points. My estimate is that the real funds rate before any action today is 1 percent or slightly below that, and that is very low by historical standards. The slowdown in growth suggests that the equilibrium real rate ... | 1,332 |
fomc | 2,008 | Thank you. President Lockhart. | 7 |
fomc | 2,008 | Thank you, Mr. Chairman. I think the best course of action today is to lower the fed funds rate by 50 basis points as in alternative B. I've heard cogent arguments that 50 basis points would be restrictive and likewise accommodative. Yesterday I had a chance to look at the disabilities-related display in the elevator l... | 343 |
fomc | 2,008 | Thank you. Governor Kohn. | 7 |
fomc | 2,008 | Thank you, Mr. Chairman. Like President Lockhart, I agree with the action and the language of alternative B. As I noted a few minutes ago, I don't think a real interest rate of around 1 percent, which is where we would be after this action, is really all that aggressively low, given what we're facing in financial marke... | 1,220 |
fomc | 2,008 | Thank you. President Yellen. | 7 |
fomc | 2,008 | Thank you, Mr. Chairman. I support alternative B in the Bluebook. If we cut the federal funds rate a further 50 basis points today, we will have done a lot in just a week and a half, but I think these actions do represent an appropriate response to a substantial deterioration in economic conditions. As I said in my com... | 652 |
fomc | 2,008 | Thank you. President Poole. | 7 |
fomc | 2,008 | Thank you, Mr. Chairman. I can support alternative B, down 50 basis points, although as I'll try to argue in a moment, I don't think it makes a whole lot of difference whether it's down 50 or down 25. I would support the Plosser recommendation on paragraph 4, and I would also note that the statement as it's written rec... | 1,409 |
fomc | 2,008 | Thank you. President Evans. | 6 |
fomc | 2,008 | Thank you, Mr. Chairman. I favor 50 basis points today. I think that a 3 percent funds rate may be reasonably positioned for the economy given our forecast. That's the Greenbook path assumption. That certainly seemed reasonable, and today's data gave us no indication that reasonably changed that path. I, like President... | 379 |
fomc | 2,008 | Thank you. President Lacker. | 7 |
fomc | 2,008 | Thank you, Mr. Chairman. Our Vice Chairman urges humility. I strongly support that. I agree with President Evans that it's not obvious that the greater one's humility, the greater one should favor ease. I think we should be humble about the path of inflation going forward, whether it's likely to fall on its own. I thin... | 654 |
fomc | 2,008 | Thank you. President Stern. | 6 |
fomc | 2,008 | Thank you, Mr. Chairman. We had a fairly extended discussion yesterday about concerns about the condition of various financial markets and some financial institutions and their implications for the economic outlook, and I certainly share those. In this environment, I favor alternative B--a 50 basis point reduction in t... | 261 |
fomc | 2,008 | Thank you. President Fisher. | 6 |
fomc | 2,008 | Well, Mr. Chairman, I've seen the discount rate tally. I've listened carefully to all my fellow Presidents and to Governor Kohn. I suspect I know what your fellow Governors are going to recommend. I'm in a distinct minority at this table. This weekend, by the way, I searched the newspapers for something to read that di... | 2,304 |
fomc | 2,008 | Thank you. Why don't we take a coffee break and come back at 11 o'clock? Thank you. | 22 |
fomc | 2,008 | Okay. Why don't we recommence. Governor Warsh. | 12 |
fomc | 2,008 | Thank you, Mr. Chairman. I support alternative B for several reasons, not least of which because it actually seems to reasonably capture what we talked about yesterday. So I think it has that benefit. To state the obvious, we are in a very tough spot. There are clearly risks on both sides of the mandate, and for folks ... | 942 |
fomc | 2,008 | Thank you. Governor Kroszner. | 9 |
fomc | 2,008 | Thank you very much. I also support alternative B. I think by any measure 125 basis points of easing within a month is a lot and perhaps it is a nearly unprecedented level of insurance that this Committee has purchased in such a short period of time. But I think it makes sense to have done it in these circumstances bec... | 820 |
fomc | 2,008 | That's correct. I was suggesting changing only the very last sentence. | 13 |
fomc | 2,008 | Which is different from what President Plosser proposed. | 11 |
fomc | 2,008 | He proposed, as I recall, changing two sentences, eliminating the one that referred to downside risks and also changing the last sentence. I would not want to see the downside risk sentence eliminated; I would change only the very last sentence. | 47 |
fomc | 2,008 | Yes, I would agree that I would not want to see that sentence changed. I'm open to the possibility of simply changing the last sentence to go back to December 11. Now, that clearly would be taken by the market as a signal that we were moving back. Another proposal that has been put on the table is to add something abou... | 463 |
fomc | 2,008 | Thank you. Governor Mishkin. | 7 |
fomc | 2,008 | Thank you, Mr. Chairman. As you know from my discussion of the economy, I think that we're skirting a recession, but I see very large downside risks. When we looked at the Greenbook, I agreed with the view that the equilibrium fed funds rate has dropped substantially, at least 125 basis points from the last FOMC meetin... | 1,372 |
fomc | 2,008 | Thank you. President Poole. | 7 |
fomc | 2,008 | Just very quickly, given the number of people who have talked about reversals, it seems to me that the minutes need to say something about it because the minutes have to be true to the ultimate transcript as published. | 43 |
fomc | 2,008 | Vice Chairman. | 3 |
fomc | 2,008 | Thank you, Mr. Chairman. Let me just say that I am completely comfortable with the way you just framed the case, not just for thinking about and talking about strategies for how we take this back at the appropriate point, but I also don't have any problem with the way you talked about how you'd frame it in public. I th... | 1,010 |
fomc | 2,008 | Thank you, and thank you all. Let me make a few comments. The recent period has been more ragged in terms of policy and communications than I would have liked. In particular, during the past few months I think a perception has developed that we are tentative and indecisive and are not communicating clearly enough to th... | 1,784 |
fomc | 2,008 | Yes. The vote is on the language for alternative B as it is in the Bluebook and in Brian's handout and on the directive from the Bluebook, which I will read. "The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further i... | 138 |
fomc | 2,008 | Thank you very much. We'll take just a very quick recess for the Governors to meet, and then we'll come back for our presentation. | 27 |
fomc | 2,008 | Okay. Let's reconvene. We have a special presentation on policy issues raised by financial crisis. Let me turn to Pat Parkinson to introduce the presentation. | 30 |
fomc | 2,008 | 6 Thank you, Mr. Chairman. The first exhibit provides some background on efforts to analyze the policy issues raised by recent financial developments and an overview of today's briefing. As indicated in the top panel, in response to a request from the G-7, at its meeting last September the Financial Stability Forum (FS... | 2,845 |
fomc | 2,008 | Are there questions for Pat? President Lacker. | 10 |
fomc | 2,008 | You characterized underwriting as weak, and I guess the document circulated had some heavy criticism for the credit rating agencies. I want to understand more what the nature of that assessment involves. Basically is it ex post regret, or do we have objective evidence about the quality of the decisionmaking ex ante? Th... | 79 |
fomc | 2,008 | Mike is going to address that in his briefing. I guess I'd prefer to delay and just simply say that I think we can point to aspects of their methodology that look fairly weak so that it wasn't simply an ex post result but one that should have been foreseen at least to a degree if they had had a stronger methodology ex ... | 86 |
fomc | 2,008 | Okay. | 2 |
fomc | 2,008 | President Poole. | 4 |
fomc | 2,008 | I have a question on exhibit 2, the top right corner: Are those AAA examples rated as of January 1? | 25 |
fomc | 2,008 | I think that was the rating at origination. | 10 |
fomc | 2,008 | At origination, not afterward. Okay. The other question I have is really a comment. On exhibit 1, the middle panel, it seems to me something that needs to be explored here, given that this is not the first time that banks have made a lot of bad bets, is the way in which the management incentives are designed. I just ge... | 171 |
fomc | 2,008 | President Hoenig. | 4 |
fomc | 2,008 | Yes. Your exhibit 4 and your risk-based capital ratios, fourth quarter, are those as of December 31? | 24 |
fomc | 2,008 | Yes. | 2 |
fomc | 2,008 | Okay. And do these reflect losses already taken in capital rates? | 13 |
fomc | 2,008 | Yes. They reflect the developments in terms of the changes in their financial statements during the fourth quarter until the year-end. | 24 |
fomc | 2,008 | Okay. Thank you. | 5 |
fomc | 2,008 | Do you have a question, President Yellen? | 10 |
fomc | 2,008 | I wanted to support President Poole's comment. I remember very well back at Jackson Hole in 2005 that Raghuram Rajan presented a paper in which he emphasized the misalignment of incentives between investors and managers and the fact that almost everyone down the line right up to the investors themselves should have had... | 253 |
fomc | 2,008 | President Rosengren. | 5 |
fomc | 2,008 | Just a question on exhibit 4, the bottom two panels. You have the four banks there, and when you look at the capital ratios, it doesn't look that discouraging. But when I look at the credit default swaps, it looks a little less encouraging. So if I put Wachovia on this, I believe Wachovia's credit default swaps now are... | 166 |
fomc | 2,008 | Right. Well, particularly with respect to developments in the last month or two, obviously the economic outlook is cloudier. As you know, I don't think we try to reflect that fully in the capital ratios, and there is an element of stress testing and whatnot, but your other important effects are essentially looking thro... | 147 |
fomc | 2,008 | Vice Chairman. | 3 |
fomc | 2,008 | Thank you. I agree with President Poole and President Yellen about the need to focus on compensation structures and incentives, but just two observations. One is that, if you look at compensation practices among the guys who actually look as though they did pretty well against those who didn't do so well--I'm not talki... | 476 |
fomc | 2,008 | Well, partly what I would say, in general, about the pricing of risk is that many, many people, including people in the Federal Reserve, were concerned about how narrow spreads were, were concerned about some of the slippage of practices, and were predicting that trouble lay ahead. But--and I'm certainly speaking for m... | 186 |
fomc | 2,008 | Are there other questions for Pat? Okay. We can continue the presentation. | 15 |
fomc | 2,008 | As noted in the top left panel of exhibit 5, we would like to stress two key points on the rating agency and investor issues. First, credit rating agencies are one of the weak links that helped a relatively small shock in the subprime mortgage market spread so widely, though certainly not the only one. This is not just... | 1,625 |
fomc | 2,008 | Mike has described how the rating agencies treated structured-credit products; a closely related issue is how investors used these ratings. Did investors rely too much on ratings in making their investment decisions? Did they take false comfort from ratings and not really appreciate the risks they were assuming, leadin... | 870 |
fomc | 2,008 | Questions? President Lacker. | 6 |
fomc | 2,008 | I am still confused. How much of these weaknesses would have been identified by an impartial observer in January 2006, say, without knowledge of what has happened since then? | 35 |
fomc | 2,008 | Are you talking about the credit rating agency weaknesses? | 10 |
fomc | 2,008 | Yes. | 2 |
fomc | 2,008 | There are plenty of investors who said, "We are staying out of that ABS CDO market because we don't trust the ratings and we don't think we have an ability to model it." But there are also enough who were willing to take on that risk. So I think it is a combination. | 59 |
fomc | 2,008 | President Fisher. | 3 |
fomc | 2,008 | Going back to exhibit 5, the second panel, your point that we have no evidence of conflicts of interest having an effect on ratings, I am thinking about the investor-practices presentation. There is an inherent conflict of interest because the issuers pay the raters. By one account, Moody's earned 44 percent of their r... | 132 |
fomc | 2,008 | That used to be the way it was before 1970--the investors paid. I think the common explanation for why that model faded was that, once photocopy machines came into existence, there was no way to constrain the information that they were providing just to subscribers. | 54 |
fomc | 2,008 | I am well aware of that. But is there an inherent conflict of interest in the process? | 19 |
fomc | 2,008 | There is. We are not denying that there is a conflict of interest. We looked at some of the mechanisms that rating agencies have put in place to address conflicts of interest, and that is something that every rating agency is aware of. The only question is whether the mechanisms that are in place to address conflicts o... | 214 |
fomc | 2,008 | Again, remember how costly it has proven to investors to have that built-in conflict of interest. That's all. That's my say. | 26 |
fomc | 2,008 | Governor Mishkin. | 4 |
fomc | 2,008 | Actually, I wanted to focus on the same issue--conflict of interest. This is something I did a little work on in the past. When you look at the standard corporate ratings market, the move to have the issuer pay really did not create a problem in the market. There clearly is an inherent conflict of interest, but there a... | 79 |
fomc | 2,008 | Arthur Andersen. | 3 |
fomc | 2,008 | We could talk about Arthur Andersen, too, because I am going to talk about the more complicated issues of conflicts of interest. With plain vanilla conflicts of interest, if there is enough information, the market frequently can solve the problem because if you know that if you do what the issuer wants and you give a g... | 547 |
fomc | 2,008 | There is certainly a possibility that conflicts of interest were occurring in all these areas. We are taking a somewhat neutral position because we don't really have the detailed information to say more. | 35 |
fomc | 2,008 | Right. But this is the typical Federal Reserve cautiousness, and I am pushing you a little harder. | 21 |
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