Fed: Softer Recovery May Need Further ‘Policy Stimulus’

A “softer” economic recovery prompted Federal Reserve officials to discuss the possibility of “further policy stimulus” at last month’s monetary policy meeting, according to minutes released by the Fed today. Fed officials raised such a scenario as a result of persistent unemployment, modest income growth, tight credit and a housing market regressing after the expiration of homebuyer tax credits.

Fed’s Duke to Banks: Are We Impeding Your Flow of Credit?

Not only is the flow of credit still declining from the current economic downturn, it could take several years for a full lending sector recover, according to Federal Reserve Gov. Elizabeth Duke. The resumption of credit growth “has lagged that of all other cycles of the past 40 years with the exception of the 1990–91 recession,” Duke said.

Fed Caps Credit Card Penalty Fees at $25 for Non-Repeat Offenders

As part of the final phase of credit card reform, the Federal Reserve today capped penalty fees at $25 per violation, unless the card holder has made repeated violations or the card issuer can show that a higher fee is reasonable. The Fed is also requiring that credit card issuers re-evaluate any interest rate hikes since Jan. 1, 2009 to determine if reasons for the increase have changed “and, if appropriate, to reduce the rate.”

Recovery on ‘Modest’ Pace; Consumer Lending Weak: Fed

Economic activity only “modestly” improved based on the latest input received by Federal Reserve officials from the Central Bank’s 12 districts, but consumer lending weakened in most regions. Based on feedback from the business community and other contacts, the Fed’s Beige Book update released today continued to report an overall sluggish pace of recovery.

Fed Ponders Pace of Selling $1.2 Trillion in MBS Assets

Unloading $1.2 trillion from its balance sheet is no easy matter for Federal Reserve officials, with such factors as inflation, interest rates and a long, uneasy economic recovery at stake. At their April 27-28 Federal Open Market Committee meeting, Fed officials agreed that sales of its mortgage-backed securities would be implemented within a framework communicated in advance and at a gradual pace “that potentially could be adjusted in response to changes in economic and financial conditions.”

Audit of Fed to Unveil Bank Funding Details Since Crisis

The Senate unanimously approved a one-time historic audit of the Federal Reserve’s $2 trillion in emergency funding programs since Dec. 1, 2007, the onset of the financial crisis. The measure, approved in a 96-0 vote, calls for the Government Accountability Office, the investigative arm of Congress, to thoroughly investigate the Central Bank’s accounting and risk mitigation practices; and any potential conflicts of interest or favoritism in its various credit facilities.

Bernanke: We Already have ‘Systemic Approach’ to Oversight

A day after the Senate approved sweeping new authority for the dismantling of influential failing firms, Federal Reserve Chairman Ben Bernanke said the Central Bank has already adopted a “systemic approach” to oversight. That new regulatory method was derived from experience that helped steer the biggest players of the banking system out of the worst period during the financial crisis, the Fed chairman said.

Fed: Tighter Credit, Weaker Mortgage Demand Reported

Banks either continued or increased tight lending standards over the past three months – from household and small business credit cards to commercial and industrial lending – according to the Federal Reserve’s most recent survey of lending practices. Adding to the discouraging credit sector outlook is a waning demand for mortgages, compared to the last survey conducted in January, the Fed said

Bernanke: Fed’s Role Over ‘All Banks’ Helps Monetary Policy

Federal Reserve Chairman Ben Bernanke said today in prepared testimony for a congressional hearing that the Central Bank’s ability to supervise banks of all sizes “significantly” improves its effectiveness in making monetary policy and fostering financial stability. Bernanke’s testimony was prepared for a hearing before the House Financial Services Committee on the Fed’s role as chief regulator over financial institutions.

Fed: Moderate Recovery Calls for ‘Extended’ Low Rates

The Federal Reserve left the key federal funds rate at the historically low 0-.25 percent level and – more significantly – maintained its “extended period” outlook based partially on weak housing and employment sectors. In the Fed’s overview of its policy-setting Federal Open Market Committee meeting today, it suggested that economic activity is strengthening with the labor market stabilizing. The FOMC last met in January.

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