In FED We Trust, page 34
77 “We were always pessimistic” Federal Reserve Board of Governors, “Meeting of the Federal Open Market Committee,” August 13, 2002. http://www.federalreserve.gov/ monetarypolicy/files/FOMC20020813meeting.pdf
77 “I support your recommendation” Federal Reserve Board of Governors, “Meeting of the Federal Open Market Committee,” December 10, 2002. http://www.federalreserve.gov/ monetarypolicy/files/FOMC20021210meeting.pdf
78 He lamented: Bernanke, “The Transition from Academic to Policymaker,” American Economic Association, January 7, 2005. www.federalreserve.gov/ BOARDDOCS/SPEECHES/2005/20050107/default.htm
78 “essentially equivalent” Ben S. Bernanke, “Deflation: Making Sure ‘It’ Doesn’t Happen Here,” Federal Reserve Board, November 21, 2002. http://www.federalreserve.gov./BOARDDOCS/ SPEECHES/2002/20021121/default.htm
79 “Now YOU can drop” David Beckworth, “‘Helicopter Ben’ Pictures,” Macro and Other Market Musings, September 19, 2007. http://macromarketmusings.blogspot.com/ 2007/09/helicopter-ben-pictures.html
79 “Big Ben Fires Up” Joshua Zumbrun, “Big Ben Fires Up the Chopper,” Forbes, December 8, 2008. http://www.forbes.com/businessinthebeltway/2008/ 12/06/bernanke-fed-recession-biz-beltway-cx_jz_1208interest.html
79 “A part of monetary policymaking” Bernanke, “Transition from Academic …”
81 “I came to trust” The White House, “President Attends Swearing-in Ceremony for Federal Reserve Chairman Ben Bernanke,” February 6, 2006. http://georgewbush-whitehouse.archives.gov/news/releases/2006/02/
20060206.html
81 When the time came: Interviews with Ben Bernanke, Keith Hennessy, and Allan Hubbard.
82 “While speculative behavior” Ben S. Bernanke, “Skills, Ownership, and Economic Security,” July 12, 2005. http://georgewbush-whitehouse.archives.gov/cea/20050712.html
84 “embarked on a fundamentally” Vincent Reinhart, “The Governance, Communication and Conduction of the Federal Reserve’s Monetary Policy,” February 29, 2008. http://research.chicagogsb.edu/igm/events/docs/Reinhart-SecondMonetaryPolicyForum.pdf
86 “I will tell you that” Transcript, FOMC, July 2-3, 1996. http://www.federalreserve.gov/monetarypolicy/files/ FOMC20020319meeting.pdf
87 “Mr. Inflation” Interview, Alan Blinder.
88 “Changes in the structure” Lawrence Summers, “A Lack of Fear Is Cause for Concern,” Financial Times, December 27, 2006, 13.
89 “housing activity appears” Henry M. Paulson, “Statement by U.S. Treasury Secretary Henry M. Paulson following the Meeting of the G7 Finance Ministers and Central Bank Governors Essen, Germany,” February 10, 2007. http://www.ustreas.gov/press/releases/hp255.htm
89 “At this juncture” Ben S. Bernanke, “Chairman Ben S. Bernanke, the Economic Outlook before the Joint Economic Committee, U.S. Congress,” from Board of Governors of the Federal Reserve System Web site, March 28, 2007. http://www.federalreserve.gov/newsevents/testimony/ bernanke20070328a.htm
89 The Fed created: Greg Ip, “Bernanke, in First Crisis, Rewrites Fed Playbook,” Wall Street Journal, October 31, 2007, A1.
91 “We are in the midst” Timothy F. Geithner, “Perspectives on U.S. Monetary Policy,” from Federal Reserve Bank of New York Web site, April 1, 2005. http://www.newyorkfed.org/newsevents/speeches/ 2005/gei050404.html
92 “Economics policy makers” Lawrence Summers, “As America Falters, Policy Makers Must Look Ahead,” Financial Times, March 26, 2007, 17.
92 One of them: Kate Kelly, “A ‘Subprime’ Fund Is on the Brink,” Wall Street Journal, June 16, 2007, B1.
92 “near the low end” Ben Bernanke, “Semiannual Monetary Policy Report to the Congress,” House Financial Services Committee, July 18, 2007. http://www.federalreserve.gov/newsevents/ testimony/bernanke20070718a.htm
93 “fairly significant” Senate Banking Committee, hearing, July 19, 2007.
93 In April 2009: International Monetary Fund, Global Financial Stability Report, April 2009, xi. qwqwimf.org/external/pubs/ft/gfsr/2009/01/index.htm
93 On the last day of July: http://timeline.stlouisfed.org
93 “believes that there is always” “JIM CRAMER: ‘Mad Money w/Jim Cramer.’” http://www.cnbc.com/id/15838187
CHAPTER 5: PAS DE DEUX
97 “normalization of the assessment” Greg Ip and Joellen Perry, “Credit Turmoil Tests Central Banks — As Market Losses Spread, Policy Makers Grapple with Hard-Line Stance,” Wall Street Journal, August 10, 2007, A3.
97 The ECB officials: Joellen Perry, “ECB, After Hard Birth, Comes of Age in Crisis,” Wall Street Journal, November 6, 2007, A1.
99 “There was an appreciation” Interview, Eric Rosengren.
100 “Sometimes the role” Vincent Reinhart, “The Governance, Communication and Conduction of the Federal Reserve’s Monetary Policy,” February 29, 2008. http://research.chicagogsb.edu/igm/events/docs/Reinhart-SecondMonetaryPolicyForum.pdf
100 “the complete evaporation” “BNP Paribas Investment Partners temporarily suspends the calculation of the Net Asset Value of the following funds: Parvest Dynamic ABS, BNP Paribas ABS EURIBOR and BNP Paribas ABS EONIA,” August 9, 2007.
101 “We were the first” Interview with Jean-Claude Trichet, president of the European Central Bank, and Le Figaro magazine conducted by Ghislain de Montalembert, from European Central Bank Web site, January 23, 2009. http://www.ecb.int/press/key/date/2009/html/ sp090123.en.html
102 That morning: Federal Reserve Bank of New York, “Temporary Open Market Operations” Web site http://www.newyorkfed.org/markets/omo/dmm/historical/ tomo/search.cfm
103 “The lack of a spare tire” Alan Greenspan, “Do Efficient Financial Markets Mitigate Financial Crises? Before the 1999 Financial Markets Conference of the Federal Reserve Bank of Atlanta,” from the Federal Reserve Board Web site, October 19, 1999. http://www.federalreserve.gov/boarddocs/ speeches/1999/19991019.htm
103 “enable risk and return” Donald L. Kohn, “Commentary: Has Financial Development Made the World Riskier?” from Federal Reserve Bank of Kansas City Web site, August 2005. http://www.kc.frb.org/publicat/sympos/2005/PDF/ Kohn2005.pdf
104 “All of a sudden” Interview.
104 In 2006: Olivier Blanchard, “The Crisis: Basic Mechanisms and Appropriate Policies,” International Monetary Fund, April 2009. www.imf.org/external/pubs/ft/wp/2009/wp0908.pdf
105 “When the music stops” Michiyo Nakamoto and David Wighton, “Bullish Citigroup Is ‘Still Dancing’ to the Beat of the Buy-out Boom,” Financial Times, July 10, 2007, 1.
CHAPTER 6: THE FOUR MUSKETEERS: BERNANKE’S BRAIN TRUST
106 “Since 1945” Frederic Mishkin, “Asymetrical Information and Financial Crises: A Historical Perspective,” National Bureau of Economic Research, Working Papers 3400, July 1990, 29.
107 “always calm and thoughtful” Laurence Meyer, A Term at the Fed: An Insider’s View (New York: HarperBusiness, 2004), 45.
108 “It is just not credible” Alan Greenspan, “Remarks by Chairman Alan Greenspan at the Haas Annual Business Faculty Research Dialogue, University of California,” from the Federal Reserve Board Web site, September 4, 1998. http://www.federalreserve.gov/boarddocs/speeches/1998/ 19980904.htm
108 That’s what he was doing: Interview, Don Kohn.
109 Before Bernanke ascended: “Panel Discussion,” Federal Reserve Bank of St. Louis, October 13, 2003. http://research.stlouisfed.org/publications/review/04/07/ PanelDisc.pdf
110 “This is the most” Interview, John Cogan.
110 The couple has a penthouse: William Neuman, “A Board Turndown, and Then a Buyer with Board Ties,” New York Times, April 24, 2005. Also, District of Columbia property records.
113 “I told Larry” Noam Scheiber, “Obama’s Choice,” The New Republic, November 5, 2008. http://www.tnr.com/politics/story.html?id=c85b418-b-5237-4f54-891f-8385243162bd
CHAPTER 7: RE: RE: RE: RE: RE: RE: BLUE SKY
116 In the same way: Stephen Cecchetti, “Federal Reserve Policy Actions in August 2007: Frequently Asked Questions,” Vox, August 13, 2007. http:// www.voxeu.org/index.php?q=node/460
117 The “tri-party” term: Kenneth D. Garbade, “The Evolution of Repo Contracting Conventions in the 1980s.” Economic Policy Review, Federal Reserve Bank of New York, May 2006. http://www.newyorkfed.org/research/epr/ 06v12n1/0605garb.pdf
117 “The structure of the financial system” Timothy F. Geithner, “Reducing Systemic Risk in a Dynamic Financial System,” Economic Club of New York, New York City, June 9, 2008. http://www.ny.frb.org/newsevents/speeches/ 2008/tfg080609.html
117 In June 2009: Securities and Exchange Commission, “SEC Charges Former Countrywide Executives with Fraud,” June 4, 2009. http://www.sec.gov/news/press/2009/2009-129.htm
118 “We worked it out” Greg Ip, “Bernanke, in First Crisis, Rewrites Fed Playbook,” Wall Street Journal, October 31, 2007, A1.
121 He no longer: Ibid.
123 “I generally do not place” Frederic S. Mishkin, “Housing and the Monetary Transmission Mechanism,” Federal Reserve Bank of Kansas, Jackson Hole Conference, August 2007. http://www.kc.frb.org/Publicat/Sympos/2007/ PDF/Mishkin_0415.pdf
123 “The problem this time” Lawrence Summers, “This Is Where Fannie and Freddie Step In,” Financial Times, August 27, 2007. http://blogs.ft.com/wolfforum/2007/08/this-is-where-fhtml
CHAPTER 8: RUNNING FROM BEHIND
125 “You challenge Greenspan” Interview.
125 “influenced by his own” Vincent Reinhart, “The Governance, Communication and Conduction of the Federal Reserve’s Monetary Policy,” February 29, 2008. http://research.chicagogsb.edu/igm/events/docs/Reinhart-SecondMonetaryPolicyForum.pdf
127 “The Federal Reserve needs” Greg Ip, “Rate Cut Has Foes on Main Street — Some Americans Think Fed Should Avoid the ‘Hazard’ of Bailing Out Speculators,” Wall Street Journal, September 18, 2007, A2.
128 At a closed-door: Personal communication.
128 “The mistake I made” Interview, Ben Bernanke.
129 “scant evidence” FOMC minutes, October 31, 2007. http://www.federalreserve.gov/monetarypolicy/files/ fomcminutes20071031.pdf
130 “The hawks are very passionate” Laurence Meyer, “Hawks Are from Mars/Doves Are from Venus,” Monetary Policy Insights: Policy Focus, Macroeconomic Advisers LLC, August 26, 2008.
131 “Putting the ‘shm’” Frederic S. Mishkin, “Sandridge Lecture of the Virginia Association of Economists and the H. Parker Willis Lecture of Washington and Lee University, Lexington, Virginia,” March 27, 2008. http://www.federalreserve.gov/newsevents/speech/ mishkin20080327a.htm
132 After he dropped: Frederic S. Mishkin, “Risk USA 2007 Conference,” November 5, 2007. http://www.federalreserve.gov/newsevents/speech/ mishkin20071105a.htm
132 “quite unlikely” Dennis P. Lockhart, “On Rocket Science,” November 7, 2007. http://www.frbatlanta.org/invoke.cfm?
objectid=1B1B8CE2-5056-9F12-127409C441EFE60F
&method=display
132 A few months later: Dennis P. Lockhart, “Thoughts on the Future of Credit Markets,” February 7, 2008. http://www.frbatlanta.org/invoke.cfm?objectid=F400D2BA-5056-9F12-12C1F5156DCBB7A3 &method= display
132 Janet Yellen: Janet L. Yellen, “Risks and Prospects for the U.S. Economy,” July 10, 2008. http://www.frbsf.org/news/speeches/2008/0710.pdf
132 “a worrisome possibility” FOMC Minutes, June 24-25, 2008. http://www.federalreserve.gov/monetarypolicy/ fomcminutes20080625ep.htm
133 “The public should understand” Donald L. Kohn, “National Association for Business Economics Session, Allied Social Science Associations Annual Meeting,” New Orleans, Louisiana, January 5, 2008. http://www.federalreserve.gov/newsevents/speech/ kohn20080105a.htm
133 Bernanke’s speeches: Brian Blackstone, “Bernanke Reasserts Dominance over Wall Street,” Real Time Economics, July 22, 2008. http://blogs.wsj.com/economics/2008/07/22/bernanke-reasserts-dominance-over-wall-street
134 Several Fed officials: FOMC minutes, December 11, 2007. http://www.federalreserve.gov/monetarypolicy/ fomcminutes20071211.htm
134 “Underpinning this story” Lockhart, “On Rocket Science.” 134 “When I’m out there” Interview, Dennis Lockhart.
134 “monetary policy that is appropriate” Frederic S. Mishkin, “Monetary Policy Flexibility, Risk Management, and Financial Disruptions,” January 11, 2008. http://www.federalreserve.gov/newsevents/speech/ mishkin20080111a.htm
135 “Democracy is a good thing” Ethan S. Harris, Ben Bernanke’s Fed: The Federal Reserve after Greenspan (Cambridge, Mass.: Harvard Business School Publishing, 2008), 195.
135 “a deteriorating housing sector” Minutes of FOMC, December 10, 2007. http://www.federalreserve.gov/ monetarypolicy/files/fomcminutes20071211.pdf
135 “From talking to clients” Greg Ip, “Rate Cut Fails to Cheer Market; Fed Sifts Options,” Wall Street Journal, December 12, 2007, A1.
137 “Central banks have great” Stephen Cecchetti, “The Art of Crisis Management: Auctions and Swaps,” Vox, December 16, 2007. http://www.voxeu.org/index.php?q=node/814
139 “a more effective” Timothy Geithner, “Restoring Market Liquidity in a Financial Crisis,” December 13, 2007. http://www.newyorkfed.org/newsevents/speeches_archive/ 2007/gei071213.html
140 That 134 percent increase: European Central Bank, “The International Role of the Euro,” July 2008, 16. http://www.ecb.int/pub/pdf/other/euro-international-role200807en.pdf
142 By the end of December 2008: Data at http://www.ustreas.gov/press/international-reserve-position.html, Table 2
142 “Central banks have been” Barry Eichengreen, “The Global Credit Crisis as History,” December 2008. http://www.econ.berkeley.edu/∼eichengr/global_credit_crisis_history_12-3-08.pdf
146 “It does look like” Greg Ip, “Criticism of Rate Cut Mounts: Société Genérale Issue Prompts Question of Possible False Alarm,” Wall Street Journal, January 25, 2008, A2.
CHAPTER 9: “UNUSUAL AND EXIGENT”
148 “I would be very cautious” Senate Committee on Banking, hearing, March 4, 2008.
148 “Central banks typically” Charles Kindleberger and Robert Aliber, Manias, Panics and Crashes, 5th ed. (Hoboken, N.J.: John Wiley & Sons, 2005), 237.
149 in normal times: Brad DeLong, “Republic of the Central Banker,” The American Prospect, October 27, 2008. http://www.prospect.org/cs/articles?article=republic_of_the_central_banker
150 “The bottom line is simple” Paul McCulley, “The Paradox of Deleveraging Will Be Broken,” November 2008. http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2008/Global+Central+ Bank+Focus+11-08+McCulley+Paradox+of+Deleveraging+Will+Be+ Broken.htm
151 “They’ve got a month or so” Interview, Treasury staff.
153 “I think I’ve been around” Interview, Treasury staff.
154 “I just never, frankly” Senate Banking Committee, hearing, April 3, 2008.
154 Months later: Interview, Kevin Warsh.
154 $2 billion in cash: Securities and Exchange Commission, “Chairman Cox Letter to Basel Committee in Support of New Guidance on Liquidity Management,” March 20, 2008. http://www.sec.gov/news/press/2008/2008-48.htm
154 The company asked Gary Parr: Bryan Burrough, “Bringing Down Bear Stearns,” Vanity Fair, August 2008. http://www.vanityfair.com/politics/features/2008/08/ bear_stearns200808
154 Schwartz followed up: Form S-4, JPMorgan Chase.
154 “Tim, look” Interview, Timothy Geithner.
154 quietly gave Friedman: Kate Kelly and John Hilsenrath, “New York Fed Chairman’s Ties to Goldman Raise Questions,” Wall Street Journal, May 4, 2009.
156 “So what can taxpayers expect” Allan H. Meltzer, “Keep the Fed Away from Investment Bank,” Wall Street Journal, July 16, 2008, A17.
157 The SEC was legally: Kara Scannell and Susanne Craig, “SEC Chief under Fire as Fed Seeks Bigger Wall Street Role — Cox Draws Criticism for Low-Key Leadership during Bear Crisis,” Wall Street Journal, June 23, 2008, A1.
158 “We’ve got to make” Greg Ip, “Crisis Management: Fed’s Fireman on Wall Street Feels Some Heat,” Wall Street Journal, May 30, 2008, A1.
158 “Things happened very quickly” Senate Banking Committee, hearing, April 3, 2008.
159 “Everybody on the phone” Interview, Donald Kohn.
159 Bear Stearns had: Harvey Rosenbloom, et al., “Fed Interview: Managing Moral Hazard in Financial Crisis,” Economic Letter, Federal Reserve Bank of Dallas, October 2008.
160 “a gigantic centralization” Herbert Hoover, “Herbert Hoover: 1932-33,” from the Public Papers of the Presidents of the United States Web site, 1932, 308. http://quod.lib.umich.edu/cgi/t/text/pageviewer-idx?
c=ppotpus;cc=ppotpus;rgn=full%20text;
idno=4731694.1932.001;didno=4731694.1932.001;
view=image;seq=00000364
160 After the 1932 law passed: Howard H. Hackley, Lending Functions of the Federal Reserve Banks: A History (Washington, D.C.: Federal Reserve Board of Governors, 1973), 130.
160 “guiding monetary policy” David Fettig, “Lender of More Than Last Resort,” Federal Reserve Bank of Minneapolis, December 2002. http://www.minneapolisfed.org/
publications_papers/pub_display.cfm?id= 3392
162 “We recognized, of course,”: Senate Banking Committee, hearing, April 3, 2008.
163 “It seems like I showed up” Transcript posted at http://georgewbush-whitehouse.archives.gov/
news/releases/2008/03/20080314-5.html
164 “It was just clear” Robin Sidel et al., “The Week That Shook Wall Street: Inside the Demise of Bear Stearns,” Wall Street Journal, March 18, 2008, A1.
167 “It became clear that” Senate Banking Committee, hearing, April 3, 2008.
168 “My question then was” Interview, Kevin Warsh.
168“The only feasible option” Senate Banking Committee, hearing, April 3, 2008.
