mrmarket
05-23-2006, 03:38 PM
Do you think he was trying to show off and flex his "muscle" for Maria?
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Bernanke says Bartiromo episode a mistake By Alister Bull
2 hours, 15 minutes ago
Federal Reserve Chairman Ben Bernanke said on Tuesday that he had made a mistake by talking with a television reporter who then repeated his remarks, an incident that roiled financial markets and heaped criticism on the Fed chief's head.
"That episode you refer to was a lapse of judgment on my part. In the future, my communications with the public and with the markets will be entirely through regular and formal channels," Bernanke told the Senate Banking Committee.
In the low-water mark of Bernanke's almost four months in office, CNBC television anchor Maria Bartiromo said on Monday, May 1 that Bernanke had told her that he was disappointed with the views of some investors that he was dovish on inflation.
The conversation took place the previous Saturday, the night of the White House correspondents dinner -- an event that many reporters and their guests treat as off the record.
But her revelation of the conversation on live television caused a storm of speculation about whether the Fed would pause in its almost two-year interest rate hike campaign or keep going.
It also sparked criticism of Bernanke for sending confusing signals, since it came hard on the heels of his earlier testimony to Congress, when he discussed the prospects of the Fed pausing as it reviewed the economy.
Financial markets remain unsettled by the outlook for inflation and Bernanke said this was among the factors that had hurt stock prices in recent weeks.
"There are a lot of factors that are entering into the stock market, among them some reduction in the desire to bear risk, some change in the evaluation in the global economy and also some concerns about inflation," Bernanke told the hearing.
The Fed has raised interest rates in 16 consecutive quarter-percentage point steps to 5 percent and Bernanke, reiterating the bank's last policy statement, said that rates may still have to rise further.
"In our policy statement on May 10 we noted there are some upside inflation risks in the economy. Among other things, higher inflation would raise mortgage rates by raising long-term interest rates," he said. "And we indicated at that time some additional firming of policy might yet be needed in order to address those risks."
But he also said there was some time to go before the Fed's next meeting, on June 28-29, and it would be sift though all the evidence closely before making its next decision.
"We have about a month to go before the next FOMC (Federal Open Market Committee) meeting and a lot of data between now and then. We will be watching that data very carefully," Bernanke said.
FINANCIAL LITERACY
The hearing was ostensibly on the topic of financial literacy and Bernanke, in earlier remarks, said this was a was a crucial plank of an effective financial industry, but did not remove the need for strong regulation and decisive policing.
"Financial education is a critical component of a robust and effective financial marketplace but it is not a panacea. Clear disclosures, wise regulation and vigorous enforcement are also essential to ensuring that financial service providers do not engage in unfair or deceptive practices," Bernanke said.
The increasing availability of credit to U.S. families, including the extension of so-called nontraditional mortgages in the buoyant housing sector, has given rise to concerns that some households may be over-extended financially.
In addition, U.S. household debt levels have climbed steeply after the Fed cut interest rates to an ultra-low 1 percent in the aftermath of a recession in 2001, with some people using costly credit cards to finance spending.
Bernanke said that the Fed was conducting a top to bottom review of the central bank's responsibilities under the Truth and Lending Act to decide whether supervisory guidance or regulation were needed going forward.
But he said that the U.S. central bank had managed to achieve good practice in credit card disclosure with the supervisory tools that it already has in hand.
"We've found that through guidance and supervisory oversight, we've been able to get satisfactory practices from the banks that we supervise," he said.
(Additional reporting by Tim Ahmann in Washington)
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Bernanke says Bartiromo episode a mistake By Alister Bull
2 hours, 15 minutes ago
Federal Reserve Chairman Ben Bernanke said on Tuesday that he had made a mistake by talking with a television reporter who then repeated his remarks, an incident that roiled financial markets and heaped criticism on the Fed chief's head.
"That episode you refer to was a lapse of judgment on my part. In the future, my communications with the public and with the markets will be entirely through regular and formal channels," Bernanke told the Senate Banking Committee.
In the low-water mark of Bernanke's almost four months in office, CNBC television anchor Maria Bartiromo said on Monday, May 1 that Bernanke had told her that he was disappointed with the views of some investors that he was dovish on inflation.
The conversation took place the previous Saturday, the night of the White House correspondents dinner -- an event that many reporters and their guests treat as off the record.
But her revelation of the conversation on live television caused a storm of speculation about whether the Fed would pause in its almost two-year interest rate hike campaign or keep going.
It also sparked criticism of Bernanke for sending confusing signals, since it came hard on the heels of his earlier testimony to Congress, when he discussed the prospects of the Fed pausing as it reviewed the economy.
Financial markets remain unsettled by the outlook for inflation and Bernanke said this was among the factors that had hurt stock prices in recent weeks.
"There are a lot of factors that are entering into the stock market, among them some reduction in the desire to bear risk, some change in the evaluation in the global economy and also some concerns about inflation," Bernanke told the hearing.
The Fed has raised interest rates in 16 consecutive quarter-percentage point steps to 5 percent and Bernanke, reiterating the bank's last policy statement, said that rates may still have to rise further.
"In our policy statement on May 10 we noted there are some upside inflation risks in the economy. Among other things, higher inflation would raise mortgage rates by raising long-term interest rates," he said. "And we indicated at that time some additional firming of policy might yet be needed in order to address those risks."
But he also said there was some time to go before the Fed's next meeting, on June 28-29, and it would be sift though all the evidence closely before making its next decision.
"We have about a month to go before the next FOMC (Federal Open Market Committee) meeting and a lot of data between now and then. We will be watching that data very carefully," Bernanke said.
FINANCIAL LITERACY
The hearing was ostensibly on the topic of financial literacy and Bernanke, in earlier remarks, said this was a was a crucial plank of an effective financial industry, but did not remove the need for strong regulation and decisive policing.
"Financial education is a critical component of a robust and effective financial marketplace but it is not a panacea. Clear disclosures, wise regulation and vigorous enforcement are also essential to ensuring that financial service providers do not engage in unfair or deceptive practices," Bernanke said.
The increasing availability of credit to U.S. families, including the extension of so-called nontraditional mortgages in the buoyant housing sector, has given rise to concerns that some households may be over-extended financially.
In addition, U.S. household debt levels have climbed steeply after the Fed cut interest rates to an ultra-low 1 percent in the aftermath of a recession in 2001, with some people using costly credit cards to finance spending.
Bernanke said that the Fed was conducting a top to bottom review of the central bank's responsibilities under the Truth and Lending Act to decide whether supervisory guidance or regulation were needed going forward.
But he said that the U.S. central bank had managed to achieve good practice in credit card disclosure with the supervisory tools that it already has in hand.
"We've found that through guidance and supervisory oversight, we've been able to get satisfactory practices from the banks that we supervise," he said.
(Additional reporting by Tim Ahmann in Washington)