After trading mostly flat in the first 30 minutes of trading, U.S. stocks fell as Fed Chairman Ben Bernanke discussed his exit strategy.  However, the stock market is still being cushioned by hopes of a Greece bailout.

The S&P 500 is down 5.98 points, or 0.56 percent, to reach 1064.54 at 11:59 a.m. EST.  The Dow Jones Industrial Average is down 0.43 percent, or 42.93 points, to trade at 10,015.71.

The yield spreads between peripheral European nations and those of Germany narrowed today.  Similarly, the cost of insuring against default on German bonds rose modestly while those of peripheral nations fell.

After gaining over 20 percent yesterday, the American Depository Receipts (ADRs) of National Bank of Greece (NYSE:NBG) are down 4.23 percent today.

Bernanke, originally scheduled to testify in person before the U.S. House Financial Services Committee in Washington, was kept away by a severe snow storm.  The actual hearing has been postponed but his prepared testimony was released today at 10:00 am.  

In the testimony, Bernanke acknowledges that the present economic conditions warrant the current highly accommodative monetary policies.  However, he says the Fed has spent considerable effort in developing the tools [they] will need to remove policy accommodation and that they are fully confident that at the appropriate time [they] will be able to do so effectively.

In the testimony, Bernanke highlighted the steps he had already taken to withdraw liquidity, and said the tools used to achieve this may be used to further normalize monetary policy. 

Bernanke stated that many of the Fed's lending facilities to financial institutions have been closed or allowed to expire.  The only facilities, aside from the regular discount window, that are still open are the Term Auction Facility (TAF) and Term Asset-Backed Securities Loan Facility (TALF). 

TAF is scheduled to terminate after March 8 and TALF will terminate after March 31.

The Fed also reduced the maturity of discount window loans to 28 days, from 90 days, and will consider whether further reductions in the maximum loan maturity are warranted.

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