Reply #29: Silly question UIA,

[54anickel]

Depending on how tightly they regulate the GSEs, wouldn't this have somewhat the same effect on limiting credit as raising the interest rates?

With consumers driving 2/3 of the economy and personal mortgage/refinancing making up the largest percentage of the liquidity bubble, this seems like an attempt by the Fed to regain control. Lord knows their rate increases haven't been trickling through the markets quite the way they planned.

The bond markets and mortgage rates haven't been following Greenspin's lead as well as hoped for, partly because the Fed has lost control to the derivative/hedge-fund markets to such a great extent.

This jaw-boning, if the markets fall for it, could allow the Fed to stick with their "measured" pace. It might just give them the breathing room they need between that rock and hard place they've gotten themselves into. :shrug: