Fed Open Markets Committee Foresaw Crisis; Las Vegas Housing Sales Slip; Yellen New Fed Chair

The Fed thought it likely that monkey business on Capitol Hill would inflict at least temporary damage on the economy. The number of existing residential units sold in Las Vegas dropped in September, both on a monthly basis and an annual basis. And President Obama nominated Fed Vice Chairman Janet Yellen to succeed Ben Bernanke as head of the central bank.

The Federal Reserve’s  Open Market Committee released the minutes of its Sept. 17-18 meeting on Wednesday, and it appeared that the central bankers already saw trouble ahead, even then. According to the minutes, “… questions were raised about the effects on the housing sector and on the broader economy of the tightening in financial conditions in recent months, as well as about the considerable risks surrounding fiscal policy.” Loose translation: the Fed thought it likely that  monkey business on Capitol Hill would inflict at least temporary, damage on the economy, as it did in 2011.

The minutes also hinted at considerable argument among the Fed members about the future of quantitative easing, the Fed’s bond-buying program, which currently amounts to a stimulus of $85 billion a month. According to the minutes, “in their discussion of the path for monetary policy, participants debated the advantages and disadvantages of reducing the pace of the Committee’s asset purchases at this meeting, focusing importantly on whether the conditions presented to the public in June for reducing the pace of asset purchases had yet been met.”

In the end, advocates of the status quo carried the day. Even those who wanted to do some tapering of the bond-buying program wanted to do only a little, the FOMC explained: “Most of the participants leaning toward a downward adjustment in the pace of asset purchases also indicated that they favored a relatively small reduction to signal the Committee’s intention to proceed cautiously.”

Vegas Residential Sales Slow

The Greater Las Vegas Association of Realtors reported on Wednesday that the number of existing residential units sold dropped in September, both on a monthly basis and an annual basis. The market is worth special attention, because it was a poster child for the housing recession, and is something of a bellwether for the recovery.

For September, the total number of existing local single-family homes, condos and townhomes sold was 3,259. That’s down from 3,539 in August and down from 3,298 total sales in September 2012. Compared to August, single-family home sales dropped 9.2 percent during September, while sales of condos and townhomes decreased 1.5 percent. Compared to one year ago, single-family home sales were up 0.3 percent, while condo and townhome sales were down 7.3 percent.

On a positive note, GLVAR also reported fewer foreclosures and short sales. In September, 23 percent of all existing home sales were short sales, down from 25 percent in August. Another 7.4 percent of all September sales were REO, down from 8 percent in August. The remaining 69.6 percent of all sales were the traditional type, up from 67 percent in August.

Yellen Nominated for Fed Chair

As expected, President Obama nominated Fed Vice Chairman Janet Yellen on Wednesday to succeed Ben Bernanke as head of the central bank. Reaction from Congress, which is somewhat distracted by other matters right now, was muted. No hearings on the nomination have been scheduled yet.

Wall Street seemed to be a little calmer on Wednesday, ending the day mixed instead of significantly down. The Dow Jones Industrial average was up by 26.45 points, or 0.16 percent, while the S&P 500 eked out a 0.06 percent gain. The Nasdaq dropped 0.46 percent.