firms. the federal reserve, with which fhfa consulted on the conservatorship decision as specified in the july legislation, supported these steps as necessary and appropriate. we have seen benefits of this action in the form of lower mortgage rates, which should help the housing market. the federal reserve and the treasury attempted to identify private - sector solutions for aig and lehman brothers, but none was forthcoming. in the case of aig, the federal reserve, with the support of the treasury, provided an emergency credit line to facilitate an orderly resolution. the federal reserve took this action because it judged that, in light of the prevailing market conditions and the size and composition of aig's obligations, a disorderly failure of aig would have severely threatened global financial stability and, consequently, the performance of the u. s. economy. to mitigate concerns that this action would exacerbate moral hazard and encourage inappropriate risk - taking in the future, the federal reserve ensured that the terms of the credit extended to aig imposed significant costs and constraints on the firm's owners, managers, and creditors. the chief executive officer has been replaced. the collateral for the loan is the company itself, together with its subsidiaries. 1 ( insurance policyholders and holders of aig investment products are, however, fully protected. ) interest will accrue on the outstanding balance of the loan at a rate of three - month libor plus 850 basis points, implying a current interest rate over 11 percent. in addition, the u. s. government will receive equity participation rights corresponding to a 79. 9 percent equity interest in aig and has the right to veto the payment of dividends to common and preferred shareholders, among other things. in the case of lehman brothers, a major investment bank, the federal reserve and the treasury declined to commit public funds to support the institution. the failure of lehman posed risks. but the troubles at lehman had been well known for some time, and investors clearly recognized – as evidenced, for example, by the high cost of insuring lehman's debt in the market for credit default swaps – that the failure of the firm was a significant possibility. thus, we judged that investors and counterparties had had time to take precautionary measures. while perhaps manageable in itself, lehman's default was combined with the unexpectedly rapid collapse of aig, which together contributed to the development last week of extraordinarily turbulent conditions in global financial markets

this harmonized basis would have increased three or four tenths of a percentage point more slowly than the published cpi, on average, over the past few years, largely because prices of owner - occupied housing have been rising more rapidly than the other components. arguably, the published index, with broader coverage, is more relevant to assessing inflation trends in the united states than would be the harmonized index. as long as relative prices can and do diverge across countries, the harmonized indexes need to contain as broad a range of items as is practical. as monetary union proceeds, then, it would be to the advantage of monetary authorities in the euro area to have a consistent measure of inflation defined over a broad basket of goods and services that is measured according to established statistical methods. most useful would be for the member countries to continue the harmonization process until the national statistical agencies are truly working on a consistent basis. indeed, measuring prices consistently across countries could be an important step toward making price measurement more accurate everywhere, if harmonization results in each country ’ s best practices being adopted throughout the monetary union. moreover, different prices of the same tradable good across the community might signal inefficiencies of distribution which were not evident from other sources. harmonization of cpis in europe is just one of many examples demonstrating why price measurement techniques cannot be static. with innovation constantly leading to new products, greater variety, and higher quality, the statistical agencies must work ever harder just to stay in place. a government official in the united states once compared a nation ’ s statistical system to a tailor, measuring the economy much as a tailor measures a person for a suit of clothes - - with the difference that, unlike the tailor, the person we are measuring is running while we try to measure him. the only way the system can succeed, he said, is to be just as fast and twice as agile. that is the challenge that lies ahead, and it is, indeed, a large one. there are, however, reasons for optimism. the information revolution, which lies behind so much of the rapid technological change that makes prices difficult to measure, may also play an important role in helping our statistical agencies acquire the necessary speed and agility to better capture the changes taking place in our economies. for example, computers might some day allow our statistical agencies to tap into a great many economic transactions on a nearly real - time basis. utilizing data from store checkout scanners, which the united states is