By Steven K. Beckner

ATLANTA (MNI) – Atlanta Federal Reserve Bank President Dennis
Lockhart opened his Bank’s conference on financial markets Tuesday by
suggesting with mock sheepishness that the Greek debt crisis had
partially invalidated the conference’s “after the crisis” theme.

The topic of the Atlanta Fed’s annual financial markets conference
this year is “Up From The Ashes: The Financial System After the Crisis.”

Lockhart admitted that the title had been chosen earlier this year
when, he said “we didn’t anticipate fully Europe’s sovereign debt
troubles.”

What’s more, “We didn’t predict the (Icelandic) volcano, so I’m not
quite sure what ashes we’re talking about,” he joshed.

Notwithstanding all that, he said the conference discussions of
securitization, too-big-to-fail and other issues should be “very
timely.”

Although the formal topic was the lessons of the waning mortgage
crisis, much of the sideline discussion has been about the new financial
crisis blowing out of Europe.

Fed officials and other conference participants from foreign
central banks, U.S. bank regulatory agencies and major financial
institutions were warily watching the financial market reaction to the
$1 trillion bail-out package hammered out over the weekend to contain
the southern European debt crisis and protect the weak the euro.

The Fed itself has lent a hand itself by reopening reciprocal
currency swap lines with the European Central Bank, which had been
allowed to expire in February. Fed officials insist the swaps, designed
to ease dollar funding strains for European banks, do not expose the Fed
or U.S. taxpayers to any risk.

The mood among conference participants is hopeful but dubious
whether the package will stabilize the situation in a lasting say so
long as Greece and other nations continue to run huge and increasingly
hard-to-finance budget deficits.

There is also uncertainty about the impact of the Greek debt crisis
on the U.S. economy, but the consensus is that the crisis can only be a
net negative for the recovery.

** Market News International **

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