Change the Fed, Keep Bernanke

Fed says inflation on target, but unemployment high, growth sluggish

(NEWSER) - Don't get too excited about that pending economic rebound . The Federal Reserve's announcement it will keep interest rates super-low into 2014 is a key sign that the US economy is years away from truly recovering, reports the New York Times . Yes, the economy has picked up "moderately," said the Fed in a statement, but jobs are still scarce and growth is expected to be sluggish for the foreseeable future—2.7% in 2012, 3.2% in 2013, and perhaps as high as 4% in 2014. “What did we learn today? Things are bad, and they’re not improving at the rate that they want them to improve,” said the chief US economist at HSBC. More»

Geithner, Bernanke, others missed signs of the pending collapse

(NEWSER) - The Fed released transcripts from meetings in 2006 today that reveal just how badly its top officials blew it on the looming housing crisis, the New York Times reports. The industry was showing signs of distress, but the Fed's attitude boiled down to, eh, no big deal. The officials clearly did not grasp how "deeply intertwined the housing sector and financial markets had become," writes Binyamin Appelbaum. They would get the picture soon enough. Some highlights:

• Timothy Geithner (then with the New York Fed): “We think the fundamentals of the expansion going forward still look good," he said in December 2006. A few months earlier: “We just don’t see troubling signs yet of collateral damage, and we are not expecting much."

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»