The Federal Open Market Committee (FOMC) at its last meeting announced plans to start reinvesting proceeds of maturing mortgage-backed securities held by the central bank into long-term Treasurys in order to halt contraction of the nation’s balance sheet. How exactly, still remains debatable. Despite the passage of time, Federal Reserve officials continue to diverge on the best way for the Fed to proceed in any efforts to stave off deflation, as members get set to convene for the annual meeting this weekend in Jackson Hole, Wyo. The use of MBS sales to this end is a hot topic as economic growth can not be achieved in a deflationary environment. Already, Charles Evans, president and chief executive of the Federal Reserve Bank (FRB) of Chicago who is soon to join the FOMC said that while modifications and foreclosures are improving, any public policy decision will need to consider the millions of struggling homeowners he says are not getting help. Another regional Fed official, James Bullard president of the FRB of Saint Louis said he prefers small steps as opposed to a single ‘shock and awe‘ tactic in inching back toward quantitative easing, while another wonders if the current ZIRP rate is still necessary. And this month’s meeting was the most contentious yet during Ben Bernake’s tenure as chairman, according to The Wall Street Journal. How to manage the Fed’s $2.05trn of mortgage-backed debt and Treasury holdings remains a high priority, but reaching a consensus on specific policy changes remains elusive. On Tuesday, the Chicago Fed chief said “public policy response to the housing market collapse has become increasingly aggressive as its seriousness and difficulty has been more fully recognized.” “It’s easy to be discouraged about the outcomes of efforts to deal with the mortgage crisis,” Evans told the Indianapolis Neighborhood Housing Partnership. “While we can point to efforts that have saved thousands of homeowners from foreclosures, millions are still losing their homes.” Evans, who becomes a voting member of the FOMC next year, said one way to help the market is better education for borrowers about homeownership and mortgages. In economic commentary today, Federal Reserve Bank of Cleveland economist Pedro Amaral, says fear that the government debt is growing too large is largely misguided. Amaral argues that growth in entitlement spending from programs such as Social Security and Medicare could be more problematic than current increases in Federal appropriations. The FOMC meets again the third week of September. Write to Jason Philyaw.