More Hints from the FED

On Friday, Federal Reserve Chairman Ben Bernanke spoke to a group of economists and indicated that the FED wants to avoid bailing out investors from the consequences of their financial decisions. Investors scooped up mortgage backed securities at an incredible rate the last couple of years. Often these securities were backed by riskier subprime mortgages, and these more speculative investments are now losing value due to the subprime mortgage market’s fallout. Bernanke indicated that the FED stands ready to take action if the financial markets woes spread too far into the general economy, but his statement seems to indicate he is trying to avoid a cut in the federal funds rate at their next meeting on September 18th.