From 2009 to 2010, Huszar was responsible for managing the Feds purchase of approximately $1.25 trillion worth of mortgage-backed securities. At the time, he thought that it was a dream job, but now he is apologizing to the rest of the country for what happened... I can only say: Im sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Feds first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But Ive come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time. When the first round of quantitative easing ended, Huszar says that it was incredibly obvious that QE had done very little to benefit average Americans but that it had been an absolute coup for Wall Street... Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central banks bond purchases had been an absolute coup for Wall Street. The banks hadnt just benefited from the lower cost of making loans. Theyd also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Feds QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way. Youd think the Fed would have finally stopped to question the wisdom of QE. Think again. Only a few months later—after a 14% drop in the U.S. stock market and renewed weakening in the banking sector—the Fed announced a new round of bond buying: QE2. Germanys finance minister, Wolfgang Schäuble, immediately called the decision clueless. That was when I realized the Fed had lost any remaining ability to think independently from Wall Street.
Posted on: Sun, 24 Nov 2013 20:54:56 +0000
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