Actions taken by the Federal Reserve are helping to stabilize financial markets but the bank's newest weapon, the term-Asset-backed Lending Facility, appears to be off to a "slow start", according to New York Fed President William Dudley.
Speaking in Nashville Tennessee on Saturday, Dudley said investors' fear increased scrutiny from participating in the TALF program but "in general...the facilities have worked quite well," noting improvements in sectors targeted by the Fed's lending facilities.
Dudley attempted to dispel concerns over the massive expansion of the central bank's balance sheet, which many critics have warned could lead to rapid inflation in the United States.
He argued that all of the extraordinary facilities would automatically win themselves down as financial conditions improve and alternative sources of funding became more attractive.
As New York Fed President, Dudley is a Vice-Chairman of the Federal Reserve and consequently voting member on the Federal Open market Committee.