Wall street journal

• SEPTEMBER 22, 2011
Fed Launches New Stimulus
Dramatic Recasting of Securities Holdings Aims to Reduce Long-Term Rates
By JON HILSENRATH And LUCA DI LEO
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The Federal Reserve Wednesday said it would increase its share of longer-term Treasurys by $400 billion by June 2012 in an effort to make credit cheaper and spur spending and investment. David Wessel has details on The News Hub.
Federal Reserve Chairman Ben Bernanke, acting more aggressively than expected, launched a new package of measures to support a limping economy and once again took the kind of unconventional approach that has become a trademark of his tumultuous five-year tenure running the central bank.
The latest move by the chairman was a decision to dramatically recast the Fed's $2.65 trillion securities portfolio in an effort to reduce long-term interest rates. The Fed plans to shift its holdings so it will have more long-term U.S. Treasury bonds and more mortgage debt than previously planned. It hopes the lower rates will boost investment and spending and provide a shot of adrenaline to the beleaguered housing sector.
The shift toward longer-term Treasury securities was largely expected but slightly bigger than many in the markets had anticipated, and the action on mortgage bonds was a surprise.
The decision didn't come without the kind of controversy that also has defined Mr. Bernanke's tenure at the Fed. Three of 10 voting Fed officials opposed the action at the conclusion of a two-day meeting, saying they didn't want new measures now. The moves came just days after Republican congressional leaders took the unusual step of sending Mr. Bernanke a letter urging the Fed to do nothing, fearing any action could do more harm than good. He effectively ignored them.
Though the moves were a bit bolder than analysts expected, they weren't seen as the kind of game-changing program that could turn the economy around, a conclusion that was reflected in the markets Wednesday. The Dow Jones