Fed should begin to sell its MBS, Plosser says

WASHINGTON (MarketWatch) -- The Federal Reserve should begin to sell off its stockpile of mortgage-backed securities as soon as the recovery gains strength, Philadelphia Fed President Charles Plosser said Wednesday in a speech on the Fed's independence. Plosser was critical of steps taken by the Fed in the crisis, including lending money to major banks and buying mortgage-backed securities. "These policies have veered toward deciding how public money should be allocated across firms and sectors of the economy," which could impair the independence of the Fed, he said. "I advocate that we implement monetary policy using a portfolio that contains only Treasury securities." He said the power of the Fed to lend to companies in emergencies should be eliminated or curtailed

 

This should be happening in March but for some reason I think they will of course extend this program like they have extended every thing else. Going to be interesting to see this take place and see market reaction to it in due time.

 

Ya think Ben knows Plosser is blabbing about this stuff?

 

Of course!

Ben: "Plosser, you're up. You haven't said anything hawkish for sound bytes lately, we need you to mouth off until Friday. And this time, make it convincing."