Federal Reserve officials may be rethinking their aversion to acting against asset-price bubbles, an article of faith during former Chairman Alan Greenspan’s 18 years at the helm.
After this month’s near-collapse of Bear Stearns Cos., Minneapolis Fed Bank President Gary Stern-the longest-serving policy maker-said in a speech last week that it’s possible “to build support” for practices “designed to prevent excesses.” New York Fed President Timothy Geithner, whose district bank took on almost $30 billion of Bear Stearns assets to rescue the firm, argued two years ago for a larger role for asset prices in decision-making, and there’s no indication his views have changed.
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