Thank you, Mr. Chairman. I certainly agree that more accommodation is needed. We need to take actions to provide, as best we can, the quantitative easing equivalent of the optimal control path as discussed in the briefing. I am not sure ultimately how feasible that will be, but it is ...

May I just ask Bill Dudley if he could describe how he anticipates his operations would differ between alternative A and alternative B? How would you do things differently?

Thank you, Mr. Chairman. As gloomy as our last meeting was, conditions have deteriorated substantially further since then. Practically all of my contacts reported that economic events had turned sharply lower once again in the last three to five weeks. This goes well beyond the auto sector and other parts ...

Thanks.

Thank you, Mr. Chairman. I have a question or observation, which is of the optimistic variety although it presents sort of a challenge. In the medium-term outlook in exhibit 4, if you focus on 2010, the Greenbook projection has real GDP growing at 2.4 percent. We’re beginning to ...

Thank you, Mr. Chairman. I, too, would like to add my thanks to the staff for an excellent set of memos—very good analysis. I would agree with pretty much everyone that the economic outlook and financial stress warrant further relief for financial conditions, so I am going to be ...

You were very effective in listing a number of dire circumstances. The fact that we may challenge the maximum duration of a recession in the postwar period, any mention of the 1981-82 recession is very frightening, you even mentioned 1975 in terms of the reduction in confidence, and the 1980 ...

Thank you, Mr. Chairman. After thinking about this for quite some time, I cannot convince myself that alternative A is not the right way to go.

Thank you, Mr. Chairman. In spite of the fact that I am going to validate what President Fisher said in terms of content, I am reminded of what candidate Ronald Reagan said in 1980 against George Bush. To paraphrase, “I paid for the plane ticket down here. I’m going ...

Okay. But it would be that we have their currency and presumably that would be a state in which it had depreciated.

Thank you, Mr. Chairman. I thought there was some pretty good risk management described in the memo, but I didn’t really follow or don’t understand exactly the process by which we would generate a loss through these swap lines. Could you take us through the state of the ...

Thank you, Mr. Chairman. I’d like to say that your own commentary touched on almost all the issues that I had in front of me. I can support this action. I’m not sure it’s the ideal time, but I can certainly support this. I agree with you ...

Thank you, Mr. Chairman. I was jotting down some of the figures on the lending facilities and the magnitudes just to see if I had the right ballpark. You know, from the TAF to the TSLF, the primary dealer credit facility, and on down to today’s facility on commercial ...

Well, I suppose you answered my question there. It just seems that, in looking at the TAF auctions, there are a number of foreign institutions that, because I don’t follow it, I’m not familiar with, and these are the types of institutions that are borrowing under these agreements ...

Thank you, Mr. Chairman. I’d just like to review by asking a question. The swap lines are very large now. Could we review what could go wrong for our balance sheet in a not-so-pleasant scenario? Are these actions consistent—and I think they are—with the substantial deleveraging of ...

Right. So I fully support that sentiment, and if you find the right wording that captures it, that’s fine with me.

Just to be clear, we have gone a long way just now from its being a semantic discussion to whether or not the Committee wants to hint at the possibility of a near- term action. I do not have a problem with that. In fact, in my comments I suggested ...

Thank you, Mr. Chairman. It is really just a question. What type of reaction do we think will be engendered by inserting “closely”? Everybody understands that we monitor financial developments very carefully. So we are bringing attention to this. Will there be a presumption that we are likely to do ...

Thank you, Mr. Chairman. The unfolding financial situation is injecting enormous uncertainty into the economic outlook and policy picture. Although this analogy is imperfect, today’s uncertainty reminds me of March 2003. Then, on the eve of the invasion of Iraq, the FOMC decided that geopolitical uncertainty was so great ...

Thank you, Mr. Chairman. A funny thing happened at my board meeting the other week. I was all set to prepare them not for a rate change recommendation this time but for one in the not-too-distant future. By the time I was done, they were asking what the procedure was ...

Thank you, Mr. Chairman. Overall there has been little change in the sentiment of my business contacts since our last meeting. Most are still reporting sluggish domestic demand with little evidence of any improvement over the near term. On the price front, everyone continued to cite cost pressures. Manufacturers have ...

They do seem to be taking out a lot of insurance on the downside, right— like your Merrill Lynch put option?

Thank you.

I agree with that chain and those risks, but what I thought I was hearing from David was that the staff estimate has in it quite a substantial adjustment process in housing, and then I would expect financial players to share that assessment.

Was it 15 to 20 or 15 to 30?

The staff has been way out front in projecting the housing decline, and that has been very helpful. Is there any dissonance between what Bill said and your pretty substantial expectation of housing-price declines?

Thank you, Mr. Chairman. Regarding a comment that Bill Dudley made about housing prices, for financial institutions, it’s going to matter a lot whether we’re looking at a decline from 15 percent to 20 percent or from 15 percent to 30 percent. Housing inventories, unsold homes, are very ...

Thank you.

I think this is a good time to revisit our strategy and what we are thinking about accomplishing here. It is my understanding that the Chairman has asked you to look at unusual and exigent circumstances.

Thank you, Mr. Chairman. Bill, at our recent intermeeting call, I wasn’t expecting the characterization of the financial stresses to sort of backtrack to the point that it feels like March. Maybe somebody said it was as scary as March. I have noticed in a lot of our speeches ...

I would prefer not to be involved in term funding generally without greater study than we have done so far. But I am confident, with the additional measures that you’re talking about and the conversations, that we would end up being able to do it appropriately. I would prefer ...

Thank you, Mr. Chairman. I am concerned about the credit risk associated with the term lending here, and I suppose if everybody feels comfortable with it, then that would be all right. It does seem, though, that the value of these new programs, much as President Stern just mentioned, seems ...

Yes, I did. Thank you. I guess my basic question is, Do we feel comfortable with the level of collateralization that we are imposing on these programs for the TAF? I thought that we were expecting double collateral, and I had thought it was for a longer period of time ...

Thanks, I appreciate that. I do wonder why we didn’t have more of a robust discussion about that at the time because it seems more than just a detail, given that it was part of the representations that at least some of us—or at least I—made to ...

Thank you, Mr. Chairman. I have a question for Bill Dudley and Sandy Krieger. I am a bit confused about the discussion of the overcollateralization withdrawal. I guess I am not sure what the purpose is of the TAF collateral restriction of 50 percent only being for the day of ...

Thank you, Mr. Chairman. I will also try to be brief, in spite of the large number of questions that were handed out. The short term should be quite easy. On the tactical issues, I agree with the suggestion of extending the facilities through year-end. They seem to have worked ...

I’m alluding, without understanding or working out, to a sectoral-shifts model of unemployment and how that search process could be more difficult. You’re just taking resources that over some period took a while to allocate to the financial sector and now they have to be reallocated somewhere else.

Thank you, Mr. Chairman. I’d like to start by saying that I agree with your comments yesterday about how we should proceed with the Committee approach and think very collaboratively about the policies and delicate strategies that we’re facing. Although we disagree on a number of the elements ...

Thank you, Mr. Chairman. Most of my contacts continued to report sluggish domestic demand, and they are not currently seeing any improvement in activity. In addition, their comments often focused on the substantially higher costs that they are facing for a wide range of nonlabor inputs. With regard to business ...

Thank you, Mr. Chairman. I’d like to ask a question about inflation and labor compensation. At the last meeting, many of us, myself included, mentioned that labor compensation had not been growing very strongly, and we took that as a possible comforting comment about inflationary pressures not being too ...

Thank you, Mr. Chairman. As I mentioned earlier, I would find some discussion about the transmission mechanism useful—at what rate we think the markets would be picking up the price of risk-free yield curves. I think that would help. To the extent that we can align this with other ...

My primary comment in all of this is related to what President Stern, I think, said. The way the objectives are worded here is “enhanced monetary policy implementation,” and the memo is worded more like, “How do we get our federal funds rate target effectively?” or something like that. But ...

Thank you, Mr. Chairman. I, too, favor maintaining the federal funds rate at 2¼ percent today. The current real interest rate provides accommodative monetary conditions for an economy that is struggling near recession or is in mild recession. Our lending facilities are probably doing as much as can be expected ...

Oh. I thought these were the smart guys who really were on top of it.

Thank you, Mr. Chairman. I have a couple of questions, unfortunately. I am very sympathetic to your point about how difficult it is to understand what the relationship is between the equilibrium fed funds rate and where we are with respect to financial stress. Actually, my question is for the ...

Thank you, Mr. Chairman. I was pleasantly surprised that we have not had any major downside surprises since our March 18 meeting. So while I still recognize the economy’s downside risks, I’ve become less comfortable about signing onto the Greenbook’s judgment that a nonlinear step-down in activity ...

Thank you. That’s a fair point.

Thank you, Mr. Chairman. The Greenbook is aggressive and effective at portraying the U.S. economy as being in a mild recession. They’ve overcome the statistical evidence, which often prevents us from forecasting a recession since they are mostly surprises. There’s a nonlinear step-down in the second quarter ...

Thank you, Mr. Chairman. The question that I have gets to the appearance issue, and it is not really about the immediate concerns. To the extent that the markets are not functioning that well, this could be useful, and so I don’t really have any disagreement with that. But ...

That is 50 versus 25 in the old days.