In a speech, Philly Fed President Charles Plosser addressed the 800-lb gorilla in the room: the New York Fed’s lawsuit against Bank of America regarding mortgage putbacks.
According to CNBC, he acknowledged the inherent conflict facing the NYFRB: On the one hand it has to ensure financial stability. On the other hand, it has to pursue its legal obligations and protect the taxpayers.
There are two remarkable things here. One is that the Fed didn’t knee-jerk err on the side of financial stability and not go after BofA. The other part is that Plosser is admitting that the actions of the Fed (and PIMCO and everyone else suing BofA) do threaten financial stability.
Also, according to ForexLive, Plosser remains a QE sceptic.
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