Housing could trigger "nightmare scenario" for Fed, economists warn

11/3/2009 | Bloomberg

Because of the housing market's weakness, Federal Reserve Chairman Ben Bernanke faces a growing risk that Congress will block him when he moves to shut down the central bank's program of buying mortgage-backed securities, experts said. "The nightmare scenario for the Fed would be to see them try to sell their mortgage portfolio, and Congress steps in and tries to stop it on the grounds that the housing market hasn't fully recovered," said Ethan Harris, of Bank of America-Merrill Lynch. "The attempts to influence the Fed in the exit strategy will be pretty strong."

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