FED official responsible for quantitative easing: 'It was the greatest backdoor Wall Street bailout'

Tuesday, November 12, 2013

FED official responsible for quantitative easing: 'It was the greatest backdoor Wall Street bailout'

Published time: November 12, 2013 17:16
Edited time: November 12, 2013 18:14

Michael Nagle / Getty Images / AFP

A former Federal Reserve employee responsible for managing the agency’s quantitative easing program has written an op-ed apologizing for what he called “the greatest backdoor Wall Street bailout of all time.”
Writing in the Wall Street Journal, Andrew Huszar detailed his concerns about the Fed’s massive bond-buying measures. He argued that while the Reserve initially claimed the program would lower borrowing rates for average citizens, the trillion-dollar initiative primarily ended up lining the pockets of Wall Street executives.
“Despite the Fed's rhetoric, my program wasn't helping to make credit any more accessible for the average American,” Huszar wrote. “The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn't getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.”
What’s more, Huszar claimed that several Federal Reserve managers expressed apprehension over the effects of quantitative easing (QE) only to find their concerns ignored.
“Our warnings fell on deaf ears,” he wrote. “In the past, Fed leaders—even if they ultimately erred—would have worried obsessively about the costs versus the benefits of any major initiative. Now the only obsession seemed to be with the newest survey of financial-market expectations or the latest in-person feedback from Wall Street's leading bankers and hedge-fund managers.”

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