Analyzing the Fed’s move
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Good morning, again. We want your thoughts on the Fed’s move yesterday and what it means for mortgages and housing. In that spirit, some starting points -- Fed analysis from near and far:
L.A. Times columnist Tom Petruno writes that the Fed bought some time to restore confidence in financial markets: ‘However else the decision was dressed up -- Fed supporters say policymakers intervened to protect the economy, while critics say the central bank is simply bailing out major financial companies -- this ultimately was about confidence.’
The New York Times’ Louis Uchitelle sees a more specific goal -- reviving the suddenly frozen market for jumbo mortgages and other ‘creditworthy’ mortgages: ‘Fed policy makers and Treasury officials said that in cutting the discount rate, the Fed’s principal goal was to shore up the market for creditworthy mortgages, including those for more expensive homes.’
Inman News columnist Lou Barnes doubts that will happen: ‘The Fed’s action this morning has firewalled the mortgage panic from the rest of the banking system ... but will do nothing whatsoever to solve the underlying problems.’
Bloomberg’s Caroline Baum also returns to the mortgage market, arguing that it is ‘starting to strangle’ much bigger debt markets: ‘The rate of default isn’t extraordinary just yet, but the mortgage market is contracting in leaps and bounds, starting with originations and ending with securitizations. The tentacles of the home-loan market are starting to strangle portions of the debt, equity and even the normally staid money market.’
The DealBook blog at NYTimes.com raises the possibility that the crisis at Countrywide Financial forced the Fed to act, and says the rate cut ‘could prove controversial: : ‘Some have argued that the Fed should allow the turbulence in the credit markets to play itself out, rather than offering a lifeline to fund managers and mortgage lenders who made risky bets.’
Your thoughts? Analysis? Will it help housing? Other Fed commentary you think we should link?
Photo Credit: Reuters