Hodes Supports Federal Reserve Actions
HODES FSC
New Hampshire Union Leader
Aoife Connors
Boston University Washington News Service
Feb 10, 2009
WASHINGTON—Rep. Paul Hodes (D-N.H.) said Tuesday that the collapse of the housing market and the increasing foreclosure crisis were the triggers of the country’s financial problems and that he was pleased to see that Treasury and the Federal Reserve were moving to handle the problem.
“I have long been extremely concerned that issues around the housing market, especially the foreclosure crisis, were not only the triggers for our problems but have not had the attention devoted to them that is needed,” Hodes said after listening to testimony by Ben S. Bernanke, chairman of the Federal Reserve Board, before the House Financial Services Committee.
The Fed’s efforts to help the housing market, together with Treasury Secretary Timothy Geithner’s new plan to rescue the banking system will, “hopefully combine in a coordinated way to begin to effectively deal with the foreclosure crisis, which I think is very important” Hodes added.
Bernanke announced that the Fed and Treasury have developed a facility “that will lend against AAA-rated asset-backed securities” derived from “student loans, auto loans, credit card loans and loans guaranteed by the Small Business Administration.”
Hodes, who is a member of the committee, said he supported this new credit facility and hoped “it will help to unfreeze credit for mainstream, something that we have not seen happen despite the application of billions of dollars of TARP [Troubled Assets Relief Program] money so far.”
But Bernanke cautioned the committee that “providing liquidity to financial institutions does not directly address instability or declining credit availability.”
He said the Fed also plans to buy $100 billion of the debt of Fannie Mae, Freddie Mac and other government-sponsored enterprises.
Speaking after the hearing, Hodes said “the efforts by the Federal Reserve to set up a credit facility that will deal with buying debt of government-sponsored agencies will help to keep mortgage rates lower and support housing activity and the broader economy.”
Bernanke told the committee the Federal Reserve has employed three additional tools to improve the functioning of credit markets and to support economic activity: auctioning of short-term credit, reducing the cost of capital to banks and lowering some interest rates on adjustable-rate mortgages.
Hodes said he was heartened to hear that the Fed is actively continuing to develop innovative credit facilities to try to ease credit, including facilities that help stabilize the liquidity and, hopefully, the solvency of banks.
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