KOHN: Don't Expect Fed To Save Your House

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Donald L. Kohn, a member of the Federal Reserve Board of Governors, spoke today in Frankfurt, Germany, about the housing bubble.

The text of his speech is available at the Federal Reserve website, although it is hardly light reading, unless you happen to be an economist.

Here's a brief report on it from Reuters:

U.S. Federal Reserve Governor Donald Kohn said on Thursday that there are risks in trying to deal with asset-price bubbles through monetary policy and said preserving asset value was not the focus of policy.

In prepared remarks for delivery to a monetary policy conference in Frankfurt, Kohn coupled theoretical remarks with a warning to U.S. homeowners not to expect the Fed to step in to preserve their housing-price gains from recent years.

"Our actions will continue to be keyed to macroeconomic stability, not the stability of asset prices themselves," Kohn said.

— The Boy in the Big Housing Bubble