By Greg Brown and Ashley Martella
Washington and the Federal Reserve have it 180-degrees wrong, says longtime developer and housing-finance expert Stanley Tate. He says current policy is keeping the banks from lending money, stunting growth and keeping unemployment high.
The “book economists” at the central bank are doing damage to the housing market, which Tate believes has already bottomed and could grow strongly if only banks would start lending. He said Federal Reserve Chairman Ben Bernanke is doing a "terrible job" and his policies are wrong.
“There’s more money available in the banking industry than ever in the history of the United States,” Tate tells Newsmax.TV. Tate was CEO of the Resolution Trust Corporation in the Clinton era. Today he runs Tate Capital Real Estate Solutions, a private real-estate fund.
“The difficulty is that they’re not lending it to where it should be. None of it is being lent to new businesses, none of it is being lent to housing, none of it is being lent to anything that would constitute job opportunities. That’s one of the reasons unemployment is at a high level.”
Story continues below video.
The prevailing idea at the Fed has been to create trillions of new dollars, using some of that money to buy up Treasury bonds in hopes of keeping rates lower than the free market might otherwise set.
Simultaneously, the Fed has been paying banks to leave the money in their accounts at the Fed, providing the banks with liquidity but not necessarily the economy.
The result, so far, has been a low interest rate but also extremely limited private lending. Tate says that the answer is to let the market take back over. That likely would lead to higher rates sooner.
“I believe if interest rates rise, you’re going to get an increase in the recovery. And that’s because you’re going to get the lender, the banks, more interested in lending to developers and builders who are building new product,” Tate says.
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The “book economists” at the central bank are doing damage to the housing market, which Tate believes has already bottomed and could grow strongly if only banks would start lending. He said Federal Reserve Chairman Ben Bernanke is doing a "terrible job" and his policies are wrong.
“There’s more money available in the banking industry than ever in the history of the United States,” Tate tells Newsmax.TV. Tate was CEO of the Resolution Trust Corporation in the Clinton era. Today he runs Tate Capital Real Estate Solutions, a private real-estate fund.
“The difficulty is that they’re not lending it to where it should be. None of it is being lent to new businesses, none of it is being lent to housing, none of it is being lent to anything that would constitute job opportunities. That’s one of the reasons unemployment is at a high level.”
Story continues below video.
The prevailing idea at the Fed has been to create trillions of new dollars, using some of that money to buy up Treasury bonds in hopes of keeping rates lower than the free market might otherwise set.
Simultaneously, the Fed has been paying banks to leave the money in their accounts at the Fed, providing the banks with liquidity but not necessarily the economy.
The result, so far, has been a low interest rate but also extremely limited private lending. Tate says that the answer is to let the market take back over. That likely would lead to higher rates sooner.
“I believe if interest rates rise, you’re going to get an increase in the recovery. And that’s because you’re going to get the lender, the banks, more interested in lending to developers and builders who are building new product,” Tate says.
Read the entire article
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