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Sen. Dodd, Treasury Sec. Paulson Meet With Fed Chair Bernanke
Following the Federal Reserve's actions last week to stabilize the financial markets, leaders in Washington early this week have been advocating a variety of approaches to head off any further erosion of confidence on Wall Street — with a debate brewing over providing more liquidity for residential mortgages by lifting the portfolio caps on housing government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.
NAHB strongly supports raising those caps, applauded the Fed’s move to reduce the primary discount rate by 50 basis points and is advocating a cut in the target federal funds rate if that move should become necessary before the next scheduled meeting of the Federal Open Market Committee on Sept. 18.
Emerging from an Aug. 21 meeting with Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Henry Paulson, Senate Finance Committee Chairman Christopher Dodd said that raising the GSE caps would have “a positive effect of dampening down interest rate hikes within the conforming loans that Fannie and Freddie may deal with here.”
Unfortunately, Dodd said, the Administration appears disinclined to raise portfolio limits, even though it has the power to do so.
In an interview with CNBC prior to the meeting, Paulson suggested that “stresses and strains” in the credit markets will eventually work themselves out. With the Fed addressing their liquidity needs, he said, the markets can focus on recalibrating the risks of various investments and repricing them.
Recent turmoil in the capital markets “will take a toll on economic growth,” Paulson conceded, “but the underlying economy remains healthy and will continue to grow, create jobs and raise the standard of living.”
To watch a CNBC video of a press conference with Dodd discussing his meeting with Bernanke, click here.
To watch the CNBC interview with Paulson, click here.
These links were available at the time this issue of Nation’s Building News was published, but can be discontinued at any time.
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