Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Thank you, Mr. Chairman. I share President Stern’s intuition that the value of these at the margin, given what we already have in place, seems questionable. Even with some generosity to the theories of financial strain that seem to motivate the mechanisms we have in place, the additional contribution to alleviating stress seems just trivial, just incredibly minor, to me. I also very deeply share President Hoenig’s concern. There is an endless stream of improvements we could potentially make to our intermediation efforts here, our lending facilities. Continuing to invest in more and more improvements just sends the signal, it seems to me, that we’re settling in for the long haul and envision and expect to be offering these for quite some time. As you all know, I have deep reservations about all of these facilities. But I would think that the broad consensus of the Committee was that these are temporary, transitory facilities, and in that light I think we ought to be thinking of ways that we are going to wean the banking system off these. Adding features like this is just going to further entwine the institutions with us and develop further dependency on us and these facilities. I also think Mr. Dudley said that this was the number 1 desired improvement articulated by dealers. I think that cannot possibly be a standalone rationale for something like this. Market participants are bound to think of stuff that they would like us to do, and we can’t let that guide us. We have to have a sense that we are actually doing something of broader significance. Finally, I will say that I do strongly support the collateral policy change of making the overcollateralization apply every day that the credit is outstanding. I questioned the one-day-only part when we first brought it up with the TAF, and I think that would be a step in the right direction. Thank you.

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