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发帖数: 1980 | 1 By MARTIN CRUTSINGER
AP Economics Writer
Ben Bernanke presided over his first meeting as Federal Reserve chairman in
March 2006 believing the nation's economy could pull off a "soft landing"
from falling home prices. Three months later, Bernanke had begun to grasp
that he and others had underestimated the risk housing posed to the economy.
Newly released transcripts of Fed meetings during Bernanke's first year as
chairman show that, among Fed officials, he often expressed the most concern
about housing. But no official, according to the transcripts, recognized
the extent of the damage a housing bubble would cause. A year later, the
housing market's collapse helped send the nation into its worst recession
since the Great Depression.
In fact, Treasury Secretary Timothy Geithner, then a Fed official, expressed
confidence in September 2006 that "collateral damage" from housing could be
avoided. The transcripts released Thursday covered the eight meetings of
the central bank's chief policy-making body, the Federal Open Market
Committee, during 2006. That included the last meeting of Federal Reserve
Chairman Alan Greenspan in January of that year and Bernanke's first meeting
in March after he had succeeded Greenspan as chairman.
The Fed releases minutes of the FOMC discussions three weeks after the
meetings but full transcripts do not come out until five years later.
The transcripts for 2006 show that at first Bernanke did not express concern
about the cooling of the housing market after a boom that had pushed sales
and home prices to record levels.
"I agree with most of the commentary that the strong fundamentals support a
relatively soft landing in housing," Bernanke told his follow FOMC members
at his first meeting as chairman in March.
Also in March, Bernanke said, "I think we are unlikely to see growth being
derailed by the housing market, but I do want us to be prepared for some
quarter-to-quarter fluctuations,"
At his second meeting as chairman in May, Bernanke still seemed fairly
confident. "So far we are seeing, at worst, an orderly decline in the
housing market; but there is still, I think, a lot to be seen as to whether
the housing market will decline slowly or more quickly.
However, by the June meeting, Bernanke was expressing more caution saying
that the slowdown in housing was "an asset price correction" that bore
watching.
"Like any other asset-price correction, it's very hard to forecast, and
consequently it's an important risk and one that should lead us to be
cautious in our policy decisions," Bernanke said.
By the September meeting, Bernanke sounded even more concerned about the
impact on the broader economy from the slowdown in housing.
"I don't have quite as much confidence as some people around the table that
there will be no spillover effect," Bernanke said.
By contrast, Geithner, who was then president of the Fed's New York regional
bank, expressed more confidence that the economy could weather the troubles
in housing, saying the issue would be the impact on consumer and business
spending.
"We just don't see troubling signs yet of collateral damage and we are not
expecting much," Geithner said at the September FOMC meeting.
The discussion by the members of the FOMC, the Fed board members in
Washington and 12 regional bank presidents, gave no indication that any of
them foresaw the devastating impact that the collapse of the housing bubble
would have. The country fell into a deep recession and severe financial
crisis that led to the loss of more than 8 million jobs.
Bernanke and other Fed officials have said that they failed to see the
severity of the shock waves from the housing bust. But the transcripts of
their closed-door discussions in 2006 provide new details about how the
central bank was responding to the unfolding crisis.
The transcripts of the final meeting of the year, in December, showed that
Bernanke was still expecting that the economy would experience a "soft
landing" in which growth would slow enough to cool inflation but not drop
into a recession.
His comments came a year before the start of the Great Recession, which
economists say began in December 2007 and lasted until June 2009.
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