The loss of the securitization market is really important, so I think this facility is a very important innovation. My question is, How important were the conduits to this market, and how confident are we that there will be structures to bring back the securitization market? Or are we basically ...

A lot of these could go down quite substantially if conditions improve, and we wouldn’t control that.

The bleak outlook calls for aggressive action. With the effective federal funds rate already well below our target, there is a logic to moving to the floor at this meeting and redirecting attention to nontraditional policies. Thus, I am comfortable with alternative B and would reduce the interest rates on ...

Thank you, Mr. Chairman. As requested, I will be brief. Like the Greenbook, we see an economy in which the unemployment rate remains very elevated, and inflation is below my target for several years. Our own equations would indicate that these elevated unemployment rates are likely to put even more ...

There is a second factor. There has been discussion of extending the A1/P1 program to A2/P2, which the industry is certainly aware of, but I would highlight with the A2/P2 that a lot of the mutual funds do not want to hold it over the end of ...

To the prime money funds.

I would also like to join the chorus of people thanking the staff, in particular the staff members who were working on the memos on Japan. Having done some work on Japan myself, I know that getting the institutional details right is far from easy, particularly when you are not ...

Like the Greenbook forecast, our forecast predicts a significant recession. Further easing will likely help mitigate the severity of the recession. Coupled with improvements in short-term credit spreads, a reduction in the federal funds rate should lower rates on home equity lines of credit as well as business and consumer ...

—I would say that I’d be surprised by that outcome.

There are several looming financial problems that are likely to affect financial markets. Bill Dudley highlighted the one that I think is the biggest for me, which is that the NAV (net asset value) triggers for hedge funds will ...

Thank you, Mr. Chairman. While the LIBOR–OIS spread has narrowed somewhat, the mutual fund industry is no longer experiencing waves of redemptions, and commercial paper market conditions have improved, we’re still not back to the short-term credit conditions that prevailed before the failure of Lehman Brothers. This outcome ...

But as we narrow the target for excess reserves and have a narrow band there, you wonder whether the stop-out rate, having a lower band that is a little higher than the OIS, might be an alternative way to think about it, now that we have the excess reserves option ...

But I’m just wondering, as the OIS rate has come down, when you think of the band that we have for excess reserves, it does seem that the OIS provides a much bigger band, for example, than what we have even for excess reserves. I wonder whether, during periods ...

I have two unrelated questions. One follows up on this, but the other one is on the term auction facility. First, given how much we have expanded the term auction facility, is there any consideration to having a minimum stop-out rate, given that the last two have had fairly low ...

But there is nothing that prevents them from withdrawing those assets before that, right? Presumably, if they’re in a situation of default, they would withdraw any Treasury securities held here first.

Economic and financial conditions have deteriorated significantly. I strongly support a 50 basis point reduction, and I would not change the language. Thank you, Mr. Chairman.

That’s right.

I think it’s too soon to know whether what we did with Lehman is right. Given that the Treasury didn’t want to put money in, what happened was that we had no choice. But we took a calculated bet. If we have a run on the money market ...

Thank you, Mr. Chairman. I will be brief. This is already a historic week, and the week has just begun. The labor market is weak and getting weaker. The unemployment rate has risen 1.1 percentage points since April and is likely to rise further. I am not convinced that ...

Just an amplification on the State Street situation. My understanding is that no money actually went out. There was $20 billion in withdrawals that came in late in the day. They had a $7½ billion credit line. State Street had enough collateral to do $7½ billion. They were unwilling to ...

I support alternative B. I would actually prefer President Yellen’s language but definitely believe that we should have the word “also” in there. Tightening at this time would sap more strength from an already weak economy, and should the forecast look like the “severe financial stress” scenario or the ...

Thank you, Mr. Chairman. The Boston forecast used for the June meeting expected that the unemployment rate would peak at approximately 5.7 percent. Unfortunately, with the July employment report, the unemployment rate has already reached 5.7 percent, and we expect the economy is likely to grow less than ...

My question is for Steve. There have been judgmental adjustments to the domestic forecast reflecting financial headwinds in the United States. I’m wondering if we made the same adjustments for financial headwinds in Europe. You highlighted that residential investment looks a bit different in Europe, but they do have ...

I support the 84-day extension.

I support this recommendation.

I am supportive of the overall recommendations. I would say, along with President Evans, that I am a little worried about how the markets may react to these new additions and whether they may view it as the Federal Reserve viewing things as deteriorating rather than improving. We have to ...

I have three comments for the long term and three comments for the short term. For the long term, in the tradeoff between focusing on markets versus institutions, to the extent that we can have standardized products traded on exchanges, we don’t need to spend as much time with ...

One last question. Sorry for so many questions. The situation of Lehman was kind of interesting because you saw their stock price go down. Talking to financial institutions, both regulated and unregulated, in Boston, a lot of people were evaluating counterparty risk and deciding whether or not they were going ...

For Bear Stearns, we have one side of the transaction looking at the investment banks. On the other side of that transaction, you have companies like Fidelity, Schwab, and Federated. So as we think about who poses systemic risk, we probably want to think about both sides. In terms of ...

Okay. So roughly $100 billion. The numbers seemed to be in that range. Now, one of the reasons that we’re worried about the tri-party repo was that the securities in that tri-party repo were very illiquid. Was Bear Stearns unusual in the amount of illiquid securities that were being ...

About $150 billion?

I just have a couple of questions of fact. How big was Bear Stearns’s tri-party repo on the Thursday that they started getting into trouble—just to give a rough sense of scale? I know it’s not exact.

I support alternative B. At this time, there are significant downside risks to the economy and financial markets, as the collateral damage from the housing problems works through the economy and financial institutions. At the same time, continued increases in oil and food prices raise the risk that some part ...

Thank you, Mr. Chairman. Despite some encouraging data recently, the Boston Fed economic outlook continues to see the economy growing below potential over the next several quarters, further weakening in labor markets, and core PCE trending down in response to excess capacity. Overall, our forecast has not changed significantly since ...

Okay. Just a quick question, which doesn’t have to be answered now—given all of the financial turmoil, it would be interesting to see whether in other countries that have these different arrangements there was a decrease in either overnight or term lending with counterparties. Given the extent to ...

Thank you, Mr. Chairman. There seems to be a groundswell of opinion in financial markets, and perhaps around this table, that given the easing to date we are at or close to a point where we should pause and assess the impact of both fiscal and monetary stimulus already provided ...

Thank you, Mr. Chairman. Without judgmental adjustments, the Boston Fed forecast is somewhat more optimistic than the Greenbook. As in the Greenbook, our GDP is weak in the first half of this year, though neither of the first two quarters actually turns negative. Our slightly more optimistic forecast assumes that ...

Well, I certainly agree with the last statement that we should do what makes sense, and in this case, differentiating between kinds of collateral that are all AAA doesn’t make sense to me. We should broaden it out. I would say that in your presentation you didn’t have ...

News of the problems at Bear Stearns and the very fragile situation in financial markets complicate our decision today. Federal funds futures indicate that the market is anticipating a reduction of at least 75 basis points and probably more than that. Normally the expectations of financial market participants would not ...

Thank you, Mr. Chairman. Since our last meeting, the economic data have continued to indicate a very weak economy and that, in all likelihood, we have entered a recession. Like the Greenbook, my outlook is particularly influenced by indications of significantly weaker labor markets and a housing market that is ...

I’d like to commend the New York Fed staff for what I know has been a very difficult time over the past week. My question is almost the opposite of President Lacker’s. He raises some interesting points, but I wonder. Given the stigma issues involved and what’s ...

Market conditions have deteriorated and are likely getting worse. I strongly support both the swap and the TSLF to help mitigate those problems. In the longer run, I think we do need to consider how to better assess counterparty risk to primary dealers. Thank you, Mr. Chairman.

I just want to follow up on one of Bill Dudley’s comments. I noticed in the terms and conditions that it included that the New York Fed reserves the right to reject or declare ineligible any bid entirely at its own discretion. Under the TAF, we require that people ...

It is great to see some bank supervision people at this table, and I would just highlight one of the comments that you made about silos. It is interesting that this morning we have been discussing issues of bank balance sheet constraints and how that would occur, and it might ...

Just a question on exhibit 4, the bottom two panels. You have the four banks there, and when you look at the capital ratios, it doesn’t look that discouraging. But when I look at the credit default swaps, it looks a little less encouraging. So if I put Wachovia ...

Thank you, Mr. Chairman. I support alternative B, though I think a case can be made for alternative A. The Boston model indicates that even after a 50 basis point reduction, we still need more easing to return to an economy with both full employment and inflation below 2 percent ...

Thank you, Mr. Chairman. The contours of our forecast are broadly in line with the Greenbook: Growth well below potential for the first half of this year results in additional slack in labor markets with a consequent reduction in the core rate of inflation over time. Our forecast returns to ...

Okay. Thank you.

Just in corporate bonds, for example.

Just a quick followup, this doesn’t include losses from securities. It is only the loans, right?

Yes. I would just note with the TAF experience, going back just for a minute, that the Boston financial community has been overwhelmingly supportive. I don’t know whether you have gotten the same sense when you talk to the financial community in New York, but whether people were bidding ...