WASHINGTON — The Federal Reserve Board should better articulate how it will return its balance sheet to normal once the market turmoil ends, Charles Plosser, the president of the Federal Reserve Bank of Philadelphia, said Wednesday.

As the Fed has launched nearly a dozen lending programs for banks and other institutions, concern has grown that the central bank may have trouble unwinding its facilities smoothly.

"We must create an exit strategy from these various facilities," Mr. Plosser said in a speech at the University of Delaware. "They were created for extraordinary times and involve significant intervention in credit markets. They are not part of the normal operation of a central bank and should not be expected to continue."

Mr. Plosser's comments came the same day that the Fed released its Beige Book report on economic conditions. The report found widespread deterioration in the housing and lending sectors, making it unlikely that the Fed's balance sheet will return to its pre-crisis look anytime soon.

Still, Mr. Plosser's speech served as an unusually candid account of challenges the Fed's liquidity programs may pose. He raised concern that outside forces would complicate matters for the Fed as it decides how to end certain programs. "Will we face challenges when we attempt to liquidate these longer-term assets from our portfolio?" he asked. "Will there be pressure from various interest groups to retain certain assets? Will there be pressure to extend some of these programs by observers who feel terminating the programs might disrupt 'fragile' markets or that the economy's 'headwinds' are too strong?"

"Such pressures could threaten the Fed's independence to control its balance sheet and monetary policy," he said.

Fed Chairman Ben Bernanke outlined his vision of an "exit strategy" in a speech Tuesday in London. He said much of the Fed's holdings are short-term and can fall off its balance sheet naturally. Longer-term holdings, he admitted, would slow the Fed's return to normal operation.

In the past year the Fed's balance sheet has increased 142.1%, to $2.1 trillion on Jan. 7. The gargantuan growth in assets supports activities ranging from cash and securities auctions to money market mutual funds and the commercial paper market.

The Beige Book painted a decidedly downbeat picture of the financial sector. Lending activities slowed in the New York, St. Louis, Kansas City, and Dallas Fed districts and was described as "soft" or "weak" in the Chicago and San Francisco districts. Most districts said concern has mounted that credit quality is declining, and the availability of credit was also reported to be off.

The Fed said its contacts in the Boston district described the real estate market there as "grim" and "depressing." The San Francisco Fed said the housing market in its district was "feeble."

In the New York district, bankers said they were seeing higher delinquency rates for all loan categories. The Cleveland Fed reported that lending spreads continued to hold constant or even widened despite lower benchmark funding rates.

"This is due in part to several bankers having put in place a floor under lending interest rates," the Fed report said.

Consumers are also turning away from using credit cards for transactions. The manager of a Washington department store told the Richmond Fed, "We've had to use more coin [for change] than ever before."

The Richmond Fed also said that potential home buyers are having trouble taking advantage of lower interest rates because of "more time-intensive underwriting and stricter qualifications."

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