October 23, 2008
The Fed, Past and Present, Testifies
Posted by David Zaring

Usually, testifying before Congress is the least fun aspect of being an agency official, particularly when there's divided government.  You say things like "the last quarter had some highs and some lows, and we look forward to working closely with Congress going forward," and then they savage you and start parading out the whistleblowers.

Not so, however, when you're a Fed governor, the most independent of independent agencies, beholden not a whit to Congress for its budget or statutory direction.  Alan Greenspan famously got rock star treatment when he went up to the Hill to testify; now that the financial crisis is being blamed on him, would it happen again?  Here's the Times liveblog of his testimony before Waxman's committee today:

Mr. Waxman tells Mr. Greenspan he was “perhaps the leading proponent for deregulation,” then runs down a series of quotations over the years in which Mr. Greenspan suggested that government regulation was often unnecessary.

“Were you wrong?”, Mr. Waxman asked. Mr. Greenspan’s reply: “Partially.”

Meanwhile, current Fed governors are continuing with the anodyne.  Elizabeth Duke gave the House a rundown of what the Fed has been doing during the crisis - and believe me, that would take a while.  But she paid particular attention to what the agency is doing for homeowners; Congress is thinking about what it can do to help them out.  The Fed has a very Clinton Administration approach to the issue: lot of little initiatives, maybe not a lot of content:

A number of efforts are underway.  The Federal Reserve has worked with other agencies to put in place the standards and procedures for the new Hope for Homeowners (H4H) program, and I serve on the Oversight Board.  These loans can help borrowers who might otherwise face foreclosure because the new loan payments are more affordable and the homeowners get some equity in their homes. ...

For some time, we have called upon lenders, investors, and servicers to aggressively pursue sustainable loss mitigation activities.  For example, last year the Federal Reserve and the other banking agencies issued supervisory guidance to encourage mortgage lenders and servicers to pursue prudent loan workouts. ...

The Federal Reserve System is strategically utilizing its presence around the country through its regional Federal Reserve Banks and their branches to address foreclosures.  Our history of working closely at the local level with communities enables us to tailor activities to the specific needs of that area.  ...

In addition, we have sponsored or supported a wide range of activities in local communities.  For example, the Federal Reserve System has sponsored a series of “Recovery, Renewal, Rebuilding” forums in cities around the country... All told, the Federal Reserve System has sponsored or co-sponsored more than 80 events related to foreclosures since last summer, reaching more than 6,000 attendees including lenders, counselors, community development specialists, and policymakers.

We also have supported events that bring together borrowers with counselors, lenders, and servicers.  In August, the Federal Reserve Bank of Boston partnered with the HOPE NOW Alliance, NeighborWorks America, the Kraft family, and the New England Patriots Charitable Foundation, among many others, and held an event at Gillette Stadium.

Gosh, Gillette Stadium and the Patriots.  In August, that must have looked like a big deal indeed.

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