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AP William Dudley |
The Federal Reserve may end up taking no losses on the emergency programs it put in place to fight the crisis, New York Fed president William Dudley said on Thursday, a view that was shared by Fed vice chairman Donald Kohn.
"The Fed may ultimately avoid any losses on any of the programs," Dudley said in brief opening remarks before moderating a panel at the Boston Fed's annual conference. Dudley said the emergency facilities were shrinking naturally.
"Things have gone pretty well," he said of the exit of some of the liquidity facilities.
Fed vice chair Donald Kohn mirrored that sentiment in the audience discussion that followed the panelists' presentations.
"If you look at the liquidity facilities... the 13(3) facilities are in the process of winding down without losses," he said, referring to the emergency facilities authorized under Section 13(3) of the Federal Reserve Act.
Kohn also said the Fed was unlikely to suffer losses when it begins to sell the mortgage-backed securities it has acquired as it battled the crisis.
Kohn argued that the "announcement effect" of a program is critical, due to the reassurance it can offer to the market. Dudley had earlier said that maintaining the Fed's credibility was viewed as critical while the programs were being designed.
Dudley had earlier said that maintaining the Fed's credibility was viewed as critical while the programs were being designed.
Atlanta Federal Reserve President Dennis Lockhart also spoke Thursday, but he did not comment on the outlook for monetary policy or the economy in his remarks.
"The national economy is now emerging from a very painful episode," he said in prepared comments at the University of Miami in Coral Gables, Florida. A text of his remarks was made available in Washington.
"I see the recent financial crisis and recession as a wake-up call to think deeply about and then move ahead to build a foundation for sustained economic vitality. I consider early childhood education an important element of that foundation."
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