Bend it Like Bernanke

As reported by TPM, it looks like Fed Chairman Ben Bernanke will be outlining in the near future how exactly the Fed plans to shed some of its weight on its bloated balance sheet. The market’s reaction aside, this is a bold step from our Fed Chairman in what could be one of the most complicated transactional moves ever orchestrated by the Fed. Some things to look for: interest rates being raised on reserves; indication of what the Fed plans to do regarding their positions on MBSs and other toxic assets, which if we all remember was a rather controversial step to take; and any move to perhaps shift reserves into deposits for some short-run easing of any liquidity issues currently plaguing some of our more troubled banks.

More to follow.

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