The credit quality of individual firms and the correlation of risk factors among sectors will change quickly in the continuing process re-positioning of firms. As a consequence, issues related to sectoral exposures - as in the case of telecoms - or an increasing reliance on credit risk transfer tools, would become increasingly relevant.
Against that background, I am concerned about several troubling proposals that would subject monetary policy to undue political pressure and place new limits on the Fed’s ability to respond to future crises. My remarks will address three such proposals.