WASHINGTON (9/17/13)--Five years after the nation's financial crisis began, the Federal Reserve was preparing for its policymakers' meeting this week, with the nation waiting to see if it will announce the beginning of the wind-down of its quantitative easing (QE3) policy. Credit Union National Association Chief Economist Bill Hampel provided some analysis for Bankrate.com Monday on the impact any easing would have on mortgage interest rates.
The Federal Open Market Committee, the fed's monetary policymaking group that sets interest rates and determines how much bonds to buy and when, began its two-day meeting today and is expected to announce Wednesday whether it will start scaling back its $85 billion per month bond-buying program, known as QE3.
Each month it buys Treasury securities and mortgage-backed securities to inject cash into the banking system to keep interest rates in the low 0% to 0.25% range, said Bankrate.com.
"We've seen already a [one percentage point] increase in 30-year fixed mortgage rates since the announcement of the tapering," Hampel told the publication. "My expectation is that they won't go up too much more in the near term unless [the Fed] were to dramatically speed up the tapering," he said.
The mortgage rates reflect a belief that the Fed will phase out its bond purchases gradually, over a period of at least six months, Hampel added.
The expectation that the Fed would reduce the bond buying rose in May when Fed Chairman Ben Bernanke in a congressional hearing indicated the purchases could be reduced as early as in the next few FOMC meetings.
Some expect the reductions will start as early as this week, but others say that some recent economic reports such as home sales don't indicate as good an outlook for the economy, which could dampen any reduction.
The FOMC will make any announcement in its post-meeting statement Wednesday afternoon. Watch News Now for updates on the statement.
WASHINGTON (9/17/13)--Two banks closed Friday, which brings this year's total of failed U.S. banks to 22, the Federal Deposit Insurance Corp. announced Friday.
First National Bank, Edinburg, Texas, was closed and assumed by PlainsCapital Bank, Dallas. Also, The Community Bank, Bridgeport, Conn., was closed by The Connecticut Department of Banking, which appointed the FDIC as receiver.
As of June 30, the two banks had roughly $3.1 billion in total assets and $2.3 billion in total deposits.
The cost to the Deposit Insurance Fund will be $645 million, FDIC estimated.
So far in 2013, the National Credit Union Administration has closed 12 credit unions.