Fed begins controversial push to revive housing market

The Federal Reserve has launched a potentially controversial push to revive the battered U.S. housing market, calling on other government officials to act after largely exhausting its own tools to support the fragile economic recovery, Reuters reports. After the Fed slashed interest rates to near zero more than three years ago and amassed $2.3 trillion in bonds to spur growth, the U.S. economy showed some momentum toward the end of 2011. But many analysts are doubtful the recovery will achieve take-off velocity in 2012, and housing is one of the biggest drags. The nation’s house prices have fallen 33% from their 2006 peak, resulting in an estimated $7 trillion in household wealth losses, the Fed said last week as it took the unusual step of making an array of recommendations on housing policy to Congress. Fed officials are trying to use the central bank’s influence to overcome political resistance to expanding the government’s role in housing, which has been an important driver for the U.S. economy as it emerged from past recessions. That resistance is likely to be strong as this election year progresses, and could produce a backlash against the Fed and the Obama administration. The Fed’s push also runs counter to Chairman Ben Bernanke’s vow when he took office in 2006 to keep the central bank’s focus on monetary policy issues after his predecessor, Alan Greenspan, drew fire for wading into political debates over taxes and spending. Read the rest of Real Estate Weekly here.