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Fed scripts show housing under the radar

12 Jan, 2012

WASHINGTON, Jan. 12 (UPI) — Detailed transcripts of U.S. Federal Reserve meeting minutes released five years after the fact show only minor concern over the housing bubble in 2006.

In the first months of Fed Chairman Ben Bernanke’s tenure as the head of the central bank, two Fed officials, Gov. Susan Bies and Vice Chairwoman Janet Yellen, point out problems in the housing market could become a serious concern, The Wall Street Journal reported Thursday.

The central bank’s chief economist David Stockton also warned in March 2006 that, “Right now, it feels a bit like riding a roller coast with one’s eyes shut.”

“We sense that we are going over the top, but we just don’t know what lies below,” Stockton said in a March 27-28 meeting of the Open Market Committee, the bank’s vehicle for monetary policy decisions.

But for the most part officials, including Bernanke, waved off any sense of foreboding. In the March meeting, Bernanke says, “Again, I think we are unlikely to see growth being derailed by the housing market, but I do want us to be prepared for some quarter-to-quarter fluctuations.”

Bernanke points out that housing is a critical cornerstone to economic health, but also says he sided with “most of the commentary that the strong fundamentals support a relatively soft landing in housing.”

Open Market Committee meeting minutes are released three weeks after a meeting, but the detailed scripts are not released for five years after the meeting, the Journal said.

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