MR. WARSH
Given strong balance sheets , incredibly strong operating cash flows , and all of the momentum that they should have , I 'm as puzzled as Tim Geithner as to why we have n't seen that capital investment .
MR. WARSH
It 's key to ensuring that what happened in the financial markets does n't seep its way into the real economy .
MR. WARSH
My base case assessment there has a much lower confidence level , both in terms of timing and in terms of outcome .
MR. ROSENGREN
The monthly growth rate for bank C&I loans was 2.6 percent and for other loans and leases was 6.3 percent .
MR. ROSENGREN
However , these improvements are tenuous , and the ability to raise funds in a number of short-term financial markets remains quite difficult .
MR. ROSENGREN
Certainly , some of the financial anomalies have abated , such as the extremely low rates for short-term Treasury securities , and there are some tentative signs of improving liquidity .
MR. KROSZNER
The ABX indexes and other indexes are suggesting that markets are anticipating extremely high loss rates , even beyond what Bill was suggesting with the 15 percent loss .
MR. KROSZNER
The concern on the financial side is that , obviously , all these things put a lot of pressure on bank balance sheets .
VICE CHAIRMAN GEITHNER
Actual and anticipated losses to financial institutions have risen as the prices of a large range of assets have fallen .
MR. LOCKHART
Most of my contacts agreed that year-end balance sheet concerns are adding to market stress , but no one expressed confidence that getting past year-end will bring much reduction of concerns over counterparty weakness , asset values , and secondary market liquidity .
MR. KROSZNER
As President Poole mentioned , the banking system is in a dramatically different state from when we had challenges before in the housing market or major challenges in financial markets .
MR. KOHN
A critical channel of contagion that came into play in the intermeeting period was the involvement of the banks as providers of credit and liquidity backstops in the ABCP market .
MR. KOHN
Indeed , in the Greenbook , the output gap is noticeably wider at the end of ’08 despite near-term policy easing of 50 basis points .
MR. ROSENGREN
While incoming data have generally been weak , some higher-frequency data , like the recent labor report , might be consistent with a stronger outlook than the Greenbook forecast .
MR. ROSENGREN
The elevated rates for term lending , even over relatively short maturities , indicates significant risk aversion by market participants .
MS. LIANG
Some analysts have expressed concern that low risk spreads are encouraging firms to ramp up debt , which will lead to a sharp deterioration in corporate credit quality in the future .
MS. LIANG
One reason for the greater demand could be the relatively attractive risk-return tradeoff of loans relative to bonds , illustrated in the bottom left panel .
MR. LOCKHART
Regarding the balance of risks , it is early to materially adjust the weighting of GDP downside versus inflation upside risks .
MR. LOCKHART
All that said , another counterpart noted a large pool of money now on the sidelines that is ready to provide financing for reasonable deals if prices fall low enough .
MR. ROSENGREN
The Boston staff forecast is somewhat more optimistic on residential investment but also has somewhat higher potential than the Greenbook forecast .
MR. ROSENGREN
Furthermore , the originate-to-distribute model has been disrupted by the heightened uncertainty surrounding CDOs and CLOs that we heard about earlier this morning .
MR. KOHN
They 're raising capital , and they 're being more explicit about taking contingent liabilities like SIVs onto their balance sheets .
MR. KOHN
Although business investment spending has n't been revised down in the fourth quarter in the Greenbook , logically slower consumption growth will show through before long , as it does beginning in the first quarter in the Greenbook .
MR. DUDLEY
As shown in exhibit 3 , delinquency and foreclosure rates on prime mortgages have moved up sharply in recent months .
MR. DUDLEY
The first important development is that highly rated collateralized debt obligation -LRB- CDO -RRB- tranches -- including so-called super-senior AAA-rated tranches -- are now vulnerable .
MR. DUDLEY
The Master Liquidity Enhancement Conduit -LRB- MLEC -RRB- continues to move slowly forward , with the syndication process having just started .
MR. WARSH
The preceding discussion strikes me as giving less comfort than I had at the last FOMC meeting on the short-term resilience and dynamism of our financial markets to repair themselves quickly .
MR. WARSH
They no longer want to be market makers or market participants , but I suspect they 're going to find a reversion to the role of some years ago hard to pull off in this environment .
MR. WARSH
I share the Greenbook view that corporate defaults should increase as profits level out and leverage increases to more normal levels .
MR. WARSH
The big point of what that is predicated on is really the continued accommodation in the credit markets and the capital markets , as several people have noted .
MR. PLOSSER
Housing construction and sales continue to decline , but the pace of that decline is in line with the expectations at the time of our last meeting .
MR. PLOSSER
The Business Outlook Survey 's prices-paid index has risen considerably since the beginning of the year and has doubled since August .
MR. DUDLEY
In the mortgage sector , depository institutions will undoubtedly -- at the right price -- take up the slack in the prime jumbo mortgage market .
MR. DUDLEY
In addition , these depository institutions have turned to the Federal Home Loan Bank system as a source of term funding .
MR. DUDLEY
Moreover , investors ' ability to distinguish between `` good '' and `` bad '' ABCP programs and structured-finance products should continue to improve .
MR. DUDLEY
In addition , the asset-backed commercial paper market is very skittish in two areas -- structured investment vehicles and extendable commercial paper programs .
MR. DUDLEY
Only in the past few weeks have the problems in the subprime and corporate debt markets led to broader risk-reduction activities .
MR. DUDLEY
The effective shutdown of the CDO and CLO markets has , in turn , raised questions about the sustainability of the strong bid by private equity firms to conduct leveraged buyouts .