*Fed's Bullard says economy to shake off oil impact
*Europe seen as more troubling than states' debts
*Will take time to draw private financing to housing
(Adds quotes, details)
By Mark Felsenthal
WASHINGTON, Feb 28 A top U.S. Federal Reserve
official said on Monday the U.S. economy should do well in 2011
and that oil prices rising on tensions in the Middle East are
not currently a drag on the recovery.
"We're in very good shape for 2011, the only wild card now
is the Middle East." St. Louis Federal Reserve President James
Bullard said on CNBC.
Bullard, who is a not a voting member on the Fed's policy
setting panel this year, is viewed as a centrist on the
spectrum of supporters or opponents of aggressive Fed actions
to boost the economy.
He was optimistic about U.S. prospects, saying that even
the debt problems that some states and municipalities face were
not as severe as issues that some European nations faced.
"The economy in 2011 will help out in this situation,"
Bullard said. "As a macroeconomist ... what I'm mainly
concerned about is some kind of big problem that might look
like the European sovereign debt problem, and I do not think
that we're looking at that."
Bullard repeated comments he made last week that he would
like to dial back the Fed's $600 billion bond buying program.
The Fed promised in November to buy longer-dated Treasury
assets until the middle of this year to provide help for the
However, Bullard would not rule out further use of the
Fed's unorthodox long-term bond buying tool, which the central
bank put to use after it had already exhausted its conventional
strategy by dropping short-term rates to near zero.
"If the economy slows down, things don't look very good,
sure, you can do more if you need to," he said.
In response to questions, Bullard said that he wants to see
the private sector play a larger role in providing housing
finance and see the role of government-sponsored enterprises
like Fannie Mae and Freddie Mac dialed back.
It should be able to be phased in without disrupting
access to mortgage loans but it won't happen overnight, he
"I would think in terms of a horizon of five to seven
years," Bullard said.
(Additional reporting by Glenn Somerville, Editing by Chizu