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By Eric Jacobson | 11-20-2008 11:54 AM

Rescue Is Ugly, But Direction Is Right

Debt/income ratios must stabilize, too, says BlackRock's Peter Fisher, possible choice for NY Fed.

Eric Jacobson: Hi, I'm Eric Jacobson. I'm a fixed-income specialist with Morningstar, and we're fortunate enough today to have a guest from BlackRock. Peter Fisher is the co-head of fixed-income at BlackRock, and also a member of their executive committee.

Prior to joining BlackRock, Mr. Fisher was the under-secretary for domestic finance of the United States Treasury Department. Peter, thank you very much for joining us today.

Peter Fisher: My pleasure, nice to be here.

Eric Jacobson: So, as you know Peter, the Treasury Secretary had a recent announcement that they were going to focus more of their attention on, I believe it was consumer finance, asset-backed securities, rather than sort of the large plug, if you will, of residential mortgage-backed to the degree that they are still on the balance sheets of the banks.

The original plan having been to buy some of those off the bank balance sheets. He quoted as saying that it's sort of a bigger task than is reasonable given the resources that they have and that it was going to make the shift.

Can you talk a little bit about that, whether it's a decision that you and/or other folks at BlackRock think was the right decision? Do you think that they're going to have to go back to housing again? Help us understand that.

Peter Fisher: Well, clearly the shifting of gears has been disruptive to market expectations. I think it would have been better if the Treasury could have stayed on a smooth path.

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