Good News: We've Hit Bottom!

Banks took in billions of dollars, even as they claimed to be healthy

(NEWSER) - For more than two years, the Fed and the banks it bailed out during the 2007 to 2009 financial crisis have kept many of the details of the massive, multi-trillion-dollar bailout a secret. But, thanks to Freedom of Information Act requests, 29,000 pages of bailout details are pouring out of the Fed at last, and those details are explained in an extended and damning report by Bloomberg Markets magazine. Among the biggest revelations:

• $7.77 trillion: the total amount doled out in aid by the Fed to all the banks, as of March 2009, which Bloomberg notes surpasses 50% of the value of "everything produced in the US that year." In comparison, the $700 billion TARP "at least had some strings attached," says one House Democrat. "With the Fed programs, there was nothing."

Forecast sees it at 8.6% at end of 2012

(NEWSER) - If President Obama were hoping for a quick election-year turnaround in the jobless rate, the Federal Reserve burst his bubble today. The Fed projected unemployment will be at 8.6% at the end of 2012, not much better than the 9.1% registered in September of this year, reports the Wall Street Journal . The projections don't get remarkably better after that: The Fed sees the rate at 8% by the end of 2013 and 7.7% the following year. More»

He advises Congress not to cut spending

(AP) - Federal Reserve Chairman Ben Bernanke said today that the US economic recovery "is close to faltering" and that the central bank is prepared to take further steps to support it. (That potential action apparently pleased investors: The Dow came off the day's lows, fell a bit, then rebounded furiously to close up 153 .) Bernanke told the congressional Joint Economic Committee that the economy is growing more slowly than the Federal Reserve had expected. The biggest factor depressing consumer confidence is poor job growth, he added. More»

Move intended to hold down long-term interest rates

(AP) - The Federal Reserve says it will sell $400 billion of its shorter-term securities to buy longer-term holdings, its latest effort to boost a weak economy. The Fed's move to rebalance its $2.87 trillion portfolio could lower Treasury yields further. Ultimately, it might reduce rates on mortgages and other consumer and business loans. ( MarketWatch has more details on the strategy nicknamed "Operation Twist," so-called because in Wall Street lingo it "twists the yield curve.") The Fed also said it will reinvest its holdings of mortgage-backed securities, which would help keep mortgage rates at super-low levels. The Fed had previously reinvested the interest and principal into Treasury purchases. More»

Investors might be barking up the wrong tree

(NEWSER) - Stocks have been shooting up this week on speculation that Ben Bernanke will announce another round of quantitative easing to prop up the economy in his speech Friday at Jackson Hole. But investors had better hold their horses, Neil Irwin of the Washington Post reports, because “the appetite within the Fed for another big, splashy round of so-called QE3 is low,” and they want more evidence before making their next move. More»