November 15, 2014 12:58 am
WASHINGTON — The transcr ipts from the Federal Reserve meetings in 2008 reveal a lot about how the crisis unfolded.
White House Correspondent for West Wing Reports, Paul Brandus, joined WTOP to break down what the transcripts show.
He painted a picture of the situation six years ago.
“The housing market began collapsing in 2006. It wiped out $1.7 trillion in wealth for homeowners. The stock market collapsed,” Brandus said.
“And then came 2008 when things became even worse.”
The mortgage industry fell, and the bailouts began.
“These Fed transcripts which came out yesterday are going to be the subject of discussion for years to come,” he said.
The meeting notes reveal how close the nation was to an even larger economic catastrophe.
Brandus said the most informative revelation is finding out what the new Federal Reserve Chair, Janet Yellen, was saying in the meetings.
Yellen warned of a severe recession and a credit crisis with high risk. Yellen advised the need to distribute as much economic stimulus as possible.
In the long term, however, Brandus said concerns are that the federal stimulus only acted as an “economic sugar high.”
“One problem is that Americans are using their homes as a piggy bank,” he said.
“People are just now digging themselves out of debt. The savings rate has gone up a little bit, but that means when people are paying off debt, they are not pumping money into the economy.”
“When people are saving more. It’s good for them, but not so good for the economy as a whole,” Brandus explained.
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