Claremont McKenna College's Dean of Faculty, Gregory D. Hess, was quoted as an economics expert in a front-page article in today's Los Angeles Times. The article is about the roiling financial markets and the Federal Reserve's facilitating the sale of investment bank Bear Stearns to JPMorgan Chase & Co.
Hess, the article reported, is a former Federal Reserve economist. He appears to be of the mind that any intervention by the Fed in our financial markets is likely to be limited:
Critics argue that the Fed's freedom of action is limited by the size of its portfolio of Treasury securities, which is essentially the only financial instrument that federal law allows it to buy outright. At $709 billion as of Thursday, the portfolio is hardly chump change.
But it is dwarfed by the size of the country's financial markets.
"The Fed has enormous resources, but they are not infinite," said Gregory Hess, a former Fed economist and the dean of the faculty at Claremont McKenna College.
Hess, in his role of dean of faculty at CMC, was also involved in reviewing the Jonathan Petropoulous matter, as we noted yesterday.
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