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Q: How will the mortgage bond-buying program work? A: The Federal Reserve Bank of New York will purchase the bonds from large Wall Street banks known as "primary dealers." There are more than 20 primary dealers, including JPMorgan Chase, Goldman Sachs and Morgan Stanley. The New York Fed said it will begin purchasing the securities on Friday, and will buy a total of $23 billion this month. Q: Will it help the economy? A: Most economists say the benefits will be small. Mortgage rates are already near record lows and that has helped lift home sales. Still, sales remain below healthy levels, in part because many people can't qualify for a loan or save enough money for larger down payments required by banks. Ryan Sweet, an economist at Moody's Analytics, said the additional bond-buying could add a few tenths of a percentage point to economic growth. But Paul Edelstein, an economist at IHS Global Insight, said the impact of lower mortgage rates on growth and unemployment will "probably be imperceptible." Bernanke says the previous bond purchases created up to 2 million jobs. But he acknowledged at Thursday's news conference that Fed policy "is not a panacea" and won't solve all the economy's problems. The Fed predicts growth won't exceed 2 percent this year, although it forecasts that growth will pick up next year to as much as 3 percent.
[Associated
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