In the weeks preceding the Federal Reserve’s September meeting, Chairman Ben Bernanke persistently negotiated one of the bank’s most ambitious stimulus plans.
“This is a ‘Main Street’ policy,” Bernanke said following the two-day meeting where the bank agreed to purchase $40 billion in mortgage bonds every month until unemployment improves. “What we are about here is trying to get jobs going.”
In buying mortgage-backed bonds, the Fed hopes to push down long-term interest rates and buoy the value of homes.
Bernanke hopes the plan will boost the economy as households and businesses spend, invest, and hire more as their assets improve. The plan proved initially successful yesterday when mortgage rates fell to a record low.
In the months preceding the meeting, Bernanke negotiated the board’s support of the move in advance of the vote — an exception to the rule in today’s gridlocked political system. According to the Wall Street Journal report, he did so through constant conversation and debate, often catching board members off-guard by calling them on weekends. Bernanke identified a handful of fence-sitters and doggedly worked and compromised with them for their support. [WSJ] — Jane C. Timm