Reply #79: Fed "most responsible" for market crisis (created the "bubbles"): banker

[UpInArms]

http://www.reuters.com/article/bondsNews/idUSL0490984920080404?sp=true

CERNOBBIO, Italy (Reuters) - The U.S. Federal Reserve bears most responsibility for the current financial market turmoil as it let asset bubbles be created, the Asia chairman of U.S. bank Morgan Stanley (MS.N: Quote, Profile, Research) said on Friday.

"In my opinion the Fed is the most responsible for this crisis we are in right now," Stephen Roach told reporters on the sidelines of a business conference.

"It had a policy to tolerate or condone asset bubbles and clean up the mess afterwards," he added.

Roach, a former chief economist at the bank, said he was worried by plans to strengthen the power of the U.S. central bank.

He said lawmakers should instead revise the Fed's mandate requiring it "to do a more effective job in focusing on financial markets' stability and its impact on the real economy."

"This is a huge flaw in the government's proposal as it has been presented on Monday," Roach said.

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