Bernanke fires back on QE3, amid criticism from Romney and others

Fed Chairman Ben Bernanke
Fed Chairman Ben Bernanke

Banks have reaped enormous profits since the Federal Reserve announced its third and latest round of quantitative easing last month  — speaking debate over the Fed’s recent agreement to purchase $40 billion in mortgage bonds a month.

Fed Chairman Ben Bernanke, who negotiated QE3, defended his plan on Monday following critiques from Gov. Mitt Romney and others that the Fed was keeping interest rates “artificially low. ” Bernanke said that QE3 would not result in long-term inflation.

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Mortgage rates did fall last week to a record low, but critics point to the rate of profit on the loans, which is at a record high.

“For banks which are mortgage originators this was some of the best news they could have possibly heard,” Deutsche Bank mortgage specialist Steven Abrahams told The Financial Times. “They will continue originating loans and selling them into the market at a significant premium.” [FT]