A QE Confessional

There was a remarkable mea culpa in Monday’s Wall Street Journal that I encourage you to read. The op-ed, “Andrew Huszar: Confessions of a Quantitative Easer,” was written by the man who was tasked with implementing the policy at the heart of the Fed’s first round of quantitative easing (QE), the purchase of some $1.25 trillion in mortgage bonds during a 12-month period.

Here’s the eye-popping introduction by Huszar that basically says it all:

“I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.”

This incredible admission is something many of us have been saying for some time, and it’s significant that someone from the inside finally had the courage to acknowledge it. The fact is that QE was basically a boon for Wall Street, while Main Street got virtually nothing.

As Huszar put it, “my program wasn’t helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn’t getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.”

If you want to know what QE is all about, and more importantly what it is NOT about, then you have to read Huszar’s confessional.