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The Fed: Optimistic right until the end

2006 transcripts reveal almost surrealistic assessment of housing market

January 13, 2012 at 7:55PM

Let's get the cliche out of the way right away: Hindsight is 20/20.

Still.

The Fed has released the transcripts of its Open Market Committee meetings from 2006.

I haven't read them all, but I've parachuted into enough of them to be dumbstruck by how certain Ben Bernanke and crew were that the housing slowdown would be manageable and not have much of an impact on the economy. This placidity came despite warnings from the CEOs of major homebuilders that order cancellations were piling up at a previously unseen pace.

Here's one quote, in August 2006, that captures the general feeling. It came from Susan Bies, a Federal Reserve Board Governor who resigned in 2008:

She was not alone in that sentiment.

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about the writer

Eric Wieffering

Deputy Managing Editor | Enterprise and Investigations

Eric Wieffering, deputy managing editor for enterprise and investigations, works with reporters and editors across the newsroom on short- and longer-term enterprise stories.

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