Kevin Welsh on Last Week's Poll Question

‘The Fed has taken unprecedented action to address the worst credit crisis in our history.’ THE FED’S INVOLVEMENT IN THE FINACIAL SECTOR:

As one by one some of the nation’s (and the world’s) largest banks and financial institutions collapse, the Federal Reserve and the government have been forced to step in and involve themselves in the business world in unprecedented ways. The Fed’s level of involvement, certainly, hasn’t been seen since the Great Depression, and perhaps it even outstrips that economic disaster. But is the Fed reaching too far? Most of our readers (60%) don’t think so. In fact, they believe the Fed’s actions were necessary to keep things afloat. Only 40% think the Fed has gone too far in its involvement in the financial sector. Kevin Welsh, a senior vice president with CB Richard Ellis, is with the majority and applauds the actions of Fed Chairman Ben Bernanke. Here are his thoughts:

“The financial system in general is in uncharted waters and I don’t think anyone in their wildest imagination thought, when the economy was chugging along, thought we’d be where we are today. The Fed had to take unprecedented action to address what are arguably the worst liquidity and credit crises in the history of our country. I applaud the Fed for everything they’ve done. They pushed the federal funds rate down to 2% and it wasn’t doing anything to loosen up the market, because really what you’re dealing with here is a crisis of confidence between the financial institutions. The financial institutions do not have the confidence in one another to make loans because they’re not sure of the collateral, and that short-term lending is really what our system is based on. That has effectively shut down.