Skip to main content

The Big QuEasy: WSJ Focuses on QE

Robert Ottone
Nov 12, 2013

In an Andrew Huszar op-ed piece for the Wall Street Journal, the former quantitative easing (QE) manager with the Fed essentially refers to the program as a way for Wall Street to obtain a “backdoor bailout” from the federal government. With the third round of QE in full effect (though estimated to wrap in September 2014), the Fed is making somewhere in the vicinity of $85 billion in bond purchases every month. Huszar begins his op-ed with an apology. “I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.” Of course, there were a few to come against Huszar’s piece. Business Insider rolled out charts and figures to illustrate the fallacies of Huszar’s writing while also referring to him as being simply “a trader,” not “an economist.” Perhaps this is a backwards complement in that economists are clearly the ones who dreamed up QE in the first place. The Money Illusion highlighted portions of Huszar’s piece, answering with market-stilted jabs like “Huszar doesn’t seem to realize that financial-market reactions are the best indication of how these programs are working, indeed the only reliable indication.” As Gawker pointed out, this isn’t the first time someone has spoken plainly about QE being a shady way to fatten Wall Street executives’ pockets while not funneling the money to those who need it the most (ie: everyone else), this new dressing-down of QE is being taken seriously as its coming from not just any insider, but the guy in charge of the entire program. The Gawker piece also highlights that, while Huszar is, in fact, tearing apart the program he was a part of, Huszar doesn’t offer any ideas to put in place of QE. “Huszar's mea culpa is notably short on proposals for what should have been done instead of QE. Presumably something,” writes Gawker’s Hamilton Nolan. “The implication is that the Fed is dutifully compensating for the rest of Washington's dysfunction. But the Fed is at the center of that dysfunction,” Huszar writes. “Case in point: It has allowed QE to become Wall Street's new ‘too big to fail’ policy.” One commenter on Gawker was quick to point out that the QE policy could’ve worked out better had the money been distributed among the 315 million American citizens and would’ve resulted in every American pocketing an additional $270 a month. While not a tremendous amount of money, in a recession and in a brutal economy, every cent helps. Perhaps Huszar’s critique will open more eyes to the issues posed by QE, as well as other government fiscal policies. “As for the rest of America, good luck,” wrote Huszar. “Because QE was relentlessly pumping money into the financial markets during the past five years, it killed the urgency for Washington to confront a real crisis: that of a structurally unsound U.S. economy.”
Published
Nov 12, 2013
6 Federal Agencies Seek Comment On Proposed Rule For AVMs

The rule is intended to ensure the credibility and integrity of Automated Valuation Models.

FHA Proposes New Program To Help Struggling Homeowners

Legal expert questions whether agency has authority to implement the program.

Fitch Places Fannie, Freddie On Negative Ratings Watch

Ties credit rating to outcome of U.S. debt limit negotiations.

FHFA Director Strongly Defends New GSE Pricing Framework 

Tells House committee it’s “simply not true” that financially stronger borrowers are subsidizing others.

MBA CEO Criticizes Government Response To Economic Challenges

CEO Bob Broeksmit calls for sensible Regulation, clarity, and support for the mortgage industry.

Freddie Mac Updates Income Assessment Tool To Use Digital Pay Stubs

Says new capability helps lenders calculate borrower income more quickly and precisely.