Bernanke: No housing recovery before Fannie, Freddie revamp
Federal Reserve Chairman Ben Bernanke doesn't expect much recovery in the housing market before the Obama administration releases its recommendations for the future of Fannie Mae and Freddie Mac, expected soon. Speaking Thursday at a confab presented by the Federal Deposit Insurance Corp., Bernanke also said the Fed's bond-buying program, known as quantitative easing, has helped fuel economic growth and strengthened the stock market. However, Bernanke admitted that one of the biggest challenges to repairing the battered residential real estate market in the nation is in finding a workable solution to reducing the dominance of the GSEs in mortgage finance. This situation, he said, is set against a backdrop of emerging signs of economic recovery. And while stocks are up, some economists think the Fed's policy of purchasing Treasury securities with the proceeds of other maturing securities, does little for overall growth. Madeline Schnapp, director of macroeconomic research at TrimTabs said the program's "impact on GDP and jobs has been anemic at best." Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, voted against all policy decisions the Federal Open Market Committee made in 2010. He believes the monetary accommodation boosts "the risks of future financial imbalances" and will result in "long-term inflation expectations that could destabilize the economy." Write to Jason Philyaw.