Loan Modification

The Federal Reserve surprised no one yesterday when it announced it would purchase $600 billion of long-term Treasuries, concentrated in 2 1/2- to 10-year maturities, by the end of the second quarter of next year. The move was about as well-advertised as it gets.

Now comes the hard part. The Fed?s goal for quantitative easing, part II, is to lower other long-term rates, making it cheaper to buy homes and finance factories. With both ends of the yield curve now under the influence of the central bank, policy makers will lose one of the more important signaling measures they have.