The Federal Reserve and its key players, including Federal Chairman Ben Bernanke, have almost taken on rock star status. With the new media and cable television networks like CNBC, every move that Sir Chairman makes or every word he utters is now headlines. Use to be the Fed Chairman could deliver 50 speeches around the nation and nary make a headline. Now, CNBC has a senior reporter covering every speech and trying to parse the Fed Chairman's every word. It's a great job if you enjoy Fed nuance.
The role of the Federal Reserve and the U.S. Department of the Treasury, led by former Goldman banker Hank Paulson, will be front and center these coming months. 2008 is an election year and the news on the housing front is not improving. Not too mention the millions of mortgages that are resetting to higher monthly payments throughout the course of 2008. The Federal Reserve will likely drop the key interest rate here in December and again in the first quarter. With the key Fed Funds rate at 4.5%, the bellwether 10-year U.S. Treasury Note yielding 3.95% is already signaling a minimum cut of 25 basis points, but more than likely 50 basis points. The housing market would welcome a 50-basis point drop; it would make a nice Christmas present.
When Wal-Mart Stores, Inc. (NYSE:WMT) wanted to enter the banking business in the U.S. -- even indirectly-- consumer groups and watchdogs came out to protest the nation's largest retailer from offering banking services inside its stores.
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