In FED We Trust (44 page)

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

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 E
ONIA,”
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.

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

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

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.