In remarks this morning to a bankers meeting in New Jersey, NY Federal Reserve Bank President William Dudley argued for “further housing-related policy interventions that would help stabilize home prices, improve the housing outlook and generate an earlier recovery in housing activity.”
Dudley believes that the US needs a “comprehensive approach to stabilize the national real estate market and lay the foundations for recovery:”
I believe this should include measures to improve access to mortgage credit, reduce obstacles to refinancing, lessen the flow of homes into foreclosure through bridge financing and accelerated principal reduction, and to facilitate the absorption of REO back into use as owner- or renter- housing.
Dudley also had this to say about the Fed’s dual mandate to address both monetary policy and employment issues:
[T]he outlook for unemployment is unacceptably high relative to our dual mandate and the outlook for inflation is moderate, I believe it is also appropriate to continue to evaluate whether we could provide additional accommodation in a manner that produces more benefits than costs, regardless of whether action in housing is undertaken or not.
Depending on one’s point of view, the possibility of a third round of quantitative easing is either a threat or a blessing.