Mr. Chairman, I appreciate your calling this hearing and I appreciate Chairman Greenspan's willingness to come before the committee to testify today.
While I am relieved Chairman Greenspan finally lowered lending rates in January, I am very concerned that the Fed's action has come too late. I believe the nation's economy showed signs of slowing throughout the fourth quarter of last year, and I was absolutely flabbergasted the FOMC did not lower rates in December. Now we are in a period of economic slowdown that looks more and more like a recession. I do not believe this slowdown was inevitable. I do believe that the FOMC's actions can only be classified as too little, too late.
I have made no secret of my concerns that the FMOC, and especially the Chairman, seems to be focusing on inflation fires that do not exist. I fear that the Chairman's preoccupation with inflation has caused the FMOC to get behind the curve.
Chairman Greenspan, I realize the job you have is a very difficult one, we essentially ask you to predict the future by watching the present and researching the past. Your track record, although I have not agreed with every decision the Fed has made, is generally sound. But I believe you missed the boat on this current economic slowdown; quicker action by the FOMC may have prevented it.
I believe the FOMC should drop rates further. Banks are tightening credit standards because of the fear of a worsening economy. In fact, on February 5, 2001, the Federal Reserve Board said in its January 2001 Senior Loan Officer Opinion Survey on Bank Lending Practices, "In general, banks indicated that the most important reason for tightening standards and terms were a worse economic outlook and a reduced tolerance for risk." The Fed should drop rates further to pump new capital into the economy. There is no threat of inflation on the horizon; it is way past time to jumpstart the economy.
As the Chairman of the Subcommittee on Economic Policy, I would like to invite the Chairman to come before our subcommittee soon to testify about the Fed's policies. I hope that you will be able to find time in your schedule to come talk to us.
Once again, Mr. Chairman, I thank you for holding this hearing and I thank Chairman Greenspan for testifying. I have submitted a few questions for the record. I look forward to the Chairman's answers.
Thank you Mr. Chairman.