Fed’s Lacker Says Crisis in 2007 Worsened by Rescue Policy – Bloomberg 02-12-13

Salient to Investors:

Richmond Fed researchers estimate that at the end of 2011, 57 percent of financial sector liabilities benefited from perceived government support, versus 45 percent over a decade ago.

FRB of Richmond President Jeffrey Lacker said:

  • The financial system was weakened further in 2007 and 2008 by an ambiguous rescue policy which reduces market discipline and creates more risk by raising expectations of bailouts.
  • Evidence of a credit market bubble is ambiguous and inconclusive.
  • Monetary policy shouldn’t be used to attack speculative excesses in financial markets.
  • The Fed’s asset purchases are unlikely to add to economic growth without unacceptably increasing the risk of future inflation.

Read the full article at http://www.bloomberg.com/news/2013-02-13/fed-s-lacker-says-crisis-in-2007-worsened-by-rescue-policy.html

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