Andrew Huszar, a former Federal Reserve employee who executed QE, has written a
Wall Street Journal op-ed apologizingfor the “unprecedented shopping spree.”
Huszar worked at the Fed for seven years before leaving for Wall Street. The central bank recruited him back in 2009 to manage “what was at the heart of QE’s bond-buying spree — a wild attempt to buy $US1.25 trillion in mortgage bonds in 12 months.”
“I can only say: I’m sorry, America,” Huszar writes. From the Journal:
It wasn’t long before my old doubts resurfaced. Despite the Fed’s rhetoric, my program wasn’t helping to make credit any more accessible for the average American. 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.
From the trenches, several other Fed managers also began voicing the concern that QE wasn’t working as planned. Our warnings fell on deaf ears. 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. Sorry, U.S. taxpayer.
Huszar argues that QE, while “dutifully compensating for the rest of Washington’s dysfunction,” has become Wall Street’s new “too big to fail.”