Bernanke: FED Stands Ready to Up TAF, Other Liquidity Facilities if Needed
FED chairman Ben Bernanke is speaking via satellite to the Atlanta FED’s annual financial markets conference this morning. He says:
* The FED’s recent liquidity measures have yielded some improvement, but financial markets are still “far from normal”
* The Term Auction Facility appears to have “overcome the stigma” of discount window borrowing
* Primary Dealer Credit Facility has boosted dealers’ confidence
* FED is prepared to up the TAF if conditions warrant, but will rescind “extraordinary” liquidity facilities when they are no longer needed
* Firms must continue to deleverage, raise capital — the process may take “some time”
* Moral hazard is best addressed via regulation; regulators currently reviewing liquidity risk management