Word: frb
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...tremors were not lasting. FRB decided to support the bond market again and it firmed up. By week's end the stock market had also managed to gain back more than half its losses...
Most Government bond traders were still mystified as to just how free the bond market would be under the new policy. Last week's action indicated that FRB will support the market at least partially whenever bonds drift very far below par.' And those Government seers who had predicted dire things if FRB stopped supporting U.S. bonds above par, had been proved wrong...
...FRB also moved to tighten up bank credit in another way. It announced a twelve-man Voluntary Credit Restraint Committee (four members each from insurance companies, commercial banks and investment banks), to try to get all big U.S. lenders to clamp down on loans not vital to defense, thus help check inflation. Few expected this to be very effective in actually reducing business loans (which in New York last week soared to a new high of $6.7 billion); but FRB wanted to make he gesture before resorting to new compulsory restraints...
...solution which Banker Martin persuaded Snyder to accept was a victory for the FRB, since it established higher interest rates and a flexible policy in "pegging" the prices of Government bonds (TIME, March 19). With those points won, Tom McCabe decided that now was a good time to get back to running his Scott Paper Co. in Chester, Pa. He resigned. President Truman last week named apple-cheeked Bill Martin (subject to Senate confirmation) to the $16,000-a-year...
With a free market in bonds, chances are that prices will drop, thus interest rates will automatically rise. There is little danger that Government bonds will fall very far. If the market becomes "disorderly," FRB will certainly start supporting the bonds again, since its job is to provide an orderly market...