View more on these topics

Adam Posen calls for QE to fund securitisations

Adam Posen

Former Monetary Policy Committee external member Adam Posen is calling on the Bank of England to boost mortgage lending by directly buying securitisations through quantitative easing.

Speaking to the Treasury select committee today to scrutinise the last MPC meeting, Posen said it is a “religious belief” within the MPC that QE is only used to buy gilts.

When asked by Tory MP Andrea Leadsom whether QE can be used to boost the housing market by buying securities, Posen replied: “Absolutely, I support it. I think that would be a good idea.”

The residential mortgage-backed securitisation market has been moribund since 2007 when the credit crunch hit. The lack of investment in RMBS has cut funding lines for lenders and is seen as a key factor holding back gross mortgage lending.

Posen, who left the MPC in August after three years on the committee, claimed he had pushed for the MPC to buy other assets such as corporate debt.

He also called for much greater accountability at the Bank of England, describing the incoming Bank of England governor as ”too powerful”. He warned changing the Bank’s target from inflation to gross domestic product would be a “serious mistake”.

In a wide-ranging session, Posen said he also wants to see the break-up of Government-owned banks, the Royal Bank of Scotland and Lloyds Banking Group.

He said: “You judge it solely by creating a more competitive banking system in the UK leading to lower prices, more diversity of products. They don’t need to be broken up into, say, NatWest or RBS, and could be seperated by selling branches as happened with the Co-operative Bank. The important thing is to get a diversity of players and competing banks.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Following the advice of Adam Posen (Adam Poison) or his friend David Blanchflower is dangerous. They are obsessed with inflating asset bubbles rather than let the economy find its natural balance.

    Come on guys time to allow capitalism to take over and end the damaging stimulus.

  2. It was a informatory post and it has a significant meaning , thanks for

    sharing the information. Would love to read your next post too……..

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com