Get ready for Helicopter Ben and Bailout (again).

[Coronita]

Question: When a person get in trouble for investment decisions, who bears the cost?
Answer: That person.

Question: When companies and financial institutions get in trouble for poor investment decisions, who bears the cost?
Answer: The taxpayers.

Here we go again…

Fed eyes extending emergency loans for Wall Street

Fed weighs giving Wall Street firms more time to tap emergency loans

WASHINGTON (AP) — The Federal Reserve is considering giving squeezed Wall Street firms more time to draw emergency loans directly from the central bank to help them overcome credit problems, chairman Ben Bernanke said Tuesday.

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In an extraordinary action, the Fed in March agreed to let investment houses go to the Fed — on a temporary basis — for a quick, overnight source of cash. Those loan privileges, which are supposed to last through mid-September, are similar to those permanently afforded to commercial banks for years.

“We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end should the current unusual and exigent circumstances continue to prevail in dealer funding markets,” Bernanke said in prepared remarks to a mortgage-lending forum in Arlington, Va.

The Fed’s decision to act — temporarily at least — as a lender of last resort for Wall Street firms was made after a run on Bear Stearns pushed the investment bank to the brink of bankruptcy and raised fears that others might be in jeopardy. It was the broadest use of the Fed’s lending powers since the 1930s.

Bear Stearns was eventually taken over by JPMorgan Chase & Co., with the Fed providing $28.82 billion in financial backing.

Those controversial decisions have drawn criticism from Democrats in Congress and elsewhere that the Fed is bailing out Wall Street and putting billions of taxpayer dollars at risk.

Bernanke, in appearances on Capitol Hill has said he doesn’t believe taxpayers will suffer any losses.

In his speech Tuesday, the Fed chief defended those actions anew. If the Fed didn’t intervene, he said, problems in financial markets would have snowballed, imperiling the country.

“Allowing Bear Stearns to fail so abruptly at a time when the financial markets were already under considerable stress would likely have had extremely adverse implications for the financial system and for the broader economy,” Bernanke said to the mortgage forum, organized by the Federal Deposit Insurance Corp.

The Fed’s consideration of giving Wall Street firms more time to tap the Fed’s emergency loan program is part of an ongoing effort by the central bank to bring back stability to fragile financial markets and help to bolster shaky confidence on the part of investors.

Policymakers — in the White House, in Congress and other federal agencies — will need to work together to come up with ways to make the U.S. financial system more resilient and stable and to prevent a repeat of the types of problems that brought about the end of Bear Stearns, an 85-year-old institution, Bernanke said.

Although those efforts are already under way, it will fall to the next president and next Congress to settle them.

The Bush administration has proposed revamping the nation’s financial regulatory structure. That plan would make the Fed an ubercop in charge of financial market stability. But the Fed would lose daily supervision of big banks. Bernanke said the Fed must maintain this power if it is to be an effective overseer of financial stability.

The Fed, which regulates banks, and the Securities and Exchange Commission, which oversees investment firms, announced an information-sharing agreement on Monday aimed at better detecting potential risks to the financial system.

Over the longer term, though, Congress may need to adopt legislation to bolster supervision of investment banks and other large securities dealers, Bernanke said.

Bernanke recommended that Congress give a regulator in the future the authority to set standards for capital, liquidity holdings and risk management practices for the holding companies of the major investment banks. Currently, the SEC’s oversight of these holding companies is based on a voluntary agreement between the SEC and those firms.

“Strong holding company oversight is essential,” he said.

Bernanke also said that a growing number of central banks in recent years have been given the statutory authority to oversee systems for processing financial transactions by securities firms as well as overseeing traditional banking transactions. “A strong case can be made for granting the Federal Reserve explicit oversight for systemically important payment and settlement systems,” he said.

And, the Fed chief favors looking into an idea — raised by Treasury Secretary Henry Paulson — to create formal procedures to make sure that if an investment firm fails it won’t wreak havoc on the broader economy. Such procedures, which allow for a more orderly liquidation, are in place for banks.

To prevent a repeat of the current mortgage mess, Bernanke said the Fed next week will issue new rules aimed at protecting future homebuyers from dubious lending practices. The rule will crack down on a range of shady lending practices that has burned many of the nation’s riskiest “subprime” borrowers — those with spotty credit or low incomes — who were hardest hit by the housing and credit debacles.

The housing, credit and financial crises have bruised the economy. Growth has slowed and employers have cut jobs every month so far this year.

Bernanke said that “it is unrealistic to hope” that financial crises can be entirely eliminated, while maintaining an innovative financial system. “Nonetheless, recent experience has illustrated once again that financial instability can have serious economic costs,” he said.

[donaldduckmoore]

The Fed may increase the rate soon. Another interpretation to protecting subprime borrowers is that the renter pool is going to be stable for a long period of time.

[donaldduckmoore]

The Fed may increase the rate soon. Another interpretation to protecting subprime borrowers is that the renter pool is going to be stable for a long period of time.

[donaldduckmoore]

The Fed may increase the rate soon. Another interpretation to protecting subprime borrowers is that the renter pool is going to be stable for a long period of time.

[donaldduckmoore]

The Fed may increase the rate soon. Another interpretation to protecting subprime borrowers is that the renter pool is going to be stable for a long period of time.

[donaldduckmoore]

The Fed may increase the rate soon. Another interpretation to protecting subprime borrowers is that the renter pool is going to be stable for a long period of time.

[cr]

In other words, we screwed up by letting this thing get so out of hand and turning a blind eye to investment banks making billions off shady loans, and lending them money to do it. Now we need to offer more money to more failing institutions at the expense of the tax-payers, and anyone foolish enough to save money.

When will these people realize their socialist intervention is causing more problems than they solve?

Let the banks fail, let the homes foreclose, and let the “free” market correct itself.

Any bank foolish enough to lend $500k on $40k income deserves to go out of business. Any home”owner” who uses an ARM because they can’t afford the full payment and plans to sell shouldn’t be buying a home, and any congressmen who want to help should have to do so out of their own pocket. That’s enough taxpayer money in itself.

[cr]

In other words, we screwed up by letting this thing get so out of hand and turning a blind eye to investment banks making billions off shady loans, and lending them money to do it. Now we need to offer more money to more failing institutions at the expense of the tax-payers, and anyone foolish enough to save money.

When will these people realize their socialist intervention is causing more problems than they solve?

Let the banks fail, let the homes foreclose, and let the “free” market correct itself.

Any bank foolish enough to lend $500k on $40k income deserves to go out of business. Any home”owner” who uses an ARM because they can’t afford the full payment and plans to sell shouldn’t be buying a home, and any congressmen who want to help should have to do so out of their own pocket. That’s enough taxpayer money in itself.

[cr]

In other words, we screwed up by letting this thing get so out of hand and turning a blind eye to investment banks making billions off shady loans, and lending them money to do it. Now we need to offer more money to more failing institutions at the expense of the tax-payers, and anyone foolish enough to save money.

When will these people realize their socialist intervention is causing more problems than they solve?

Let the banks fail, let the homes foreclose, and let the “free” market correct itself.

Any bank foolish enough to lend $500k on $40k income deserves to go out of business. Any home”owner” who uses an ARM because they can’t afford the full payment and plans to sell shouldn’t be buying a home, and any congressmen who want to help should have to do so out of their own pocket. That’s enough taxpayer money in itself.

[cr]

In other words, we screwed up by letting this thing get so out of hand and turning a blind eye to investment banks making billions off shady loans, and lending them money to do it. Now we need to offer more money to more failing institutions at the expense of the tax-payers, and anyone foolish enough to save money.

When will these people realize their socialist intervention is causing more problems than they solve?

Let the banks fail, let the homes foreclose, and let the “free” market correct itself.

Any bank foolish enough to lend $500k on $40k income deserves to go out of business. Any home”owner” who uses an ARM because they can’t afford the full payment and plans to sell shouldn’t be buying a home, and any congressmen who want to help should have to do so out of their own pocket. That’s enough taxpayer money in itself.

[cr]

In other words, we screwed up by letting this thing get so out of hand and turning a blind eye to investment banks making billions off shady loans, and lending them money to do it. Now we need to offer more money to more failing institutions at the expense of the tax-payers, and anyone foolish enough to save money.

When will these people realize their socialist intervention is causing more problems than they solve?

Let the banks fail, let the homes foreclose, and let the “free” market correct itself.

Any bank foolish enough to lend $500k on $40k income deserves to go out of business. Any home”owner” who uses an ARM because they can’t afford the full payment and plans to sell shouldn’t be buying a home, and any congressmen who want to help should have to do so out of their own pocket. That’s enough taxpayer money in itself.

[Aecetia]

[quote=cooprider14]

Let the banks fail, let the homes foreclose, and let the “free” market correct itself.

Any bank foolish enough to lend $500k on $40k income deserves to go out of business. Any home”owner” who uses an ARM because they can’t afford the full payment and plans to sell shouldn’t be buying a home, and any congressmen who want to help should have to do so out of their own pocket. That’s enough taxpayer money in itself.[/quote]

I could not agree more. The Fed has definitely fomented many of the problems of today with their meddling yesterday.

[Aecetia]

[quote=cooprider14]

Let the banks fail, let the homes foreclose, and let the “free” market correct itself.

Any bank foolish enough to lend $500k on $40k income deserves to go out of business. Any home”owner” who uses an ARM because they can’t afford the full payment and plans to sell shouldn’t be buying a home, and any congressmen who want to help should have to do so out of their own pocket. That’s enough taxpayer money in itself.[/quote]

I could not agree more. The Fed has definitely fomented many of the problems of today with their meddling yesterday.

[Aecetia]

[quote=cooprider14]

Let the banks fail, let the homes foreclose, and let the “free” market correct itself.

Any bank foolish enough to lend $500k on $40k income deserves to go out of business. Any home”owner” who uses an ARM because they can’t afford the full payment and plans to sell shouldn’t be buying a home, and any congressmen who want to help should have to do so out of their own pocket. That’s enough taxpayer money in itself.[/quote]

I could not agree more. The Fed has definitely fomented many of the problems of today with their meddling yesterday.

[Aecetia]

[quote=cooprider14]

Let the banks fail, let the homes foreclose, and let the “free” market correct itself.

Any bank foolish enough to lend $500k on $40k income deserves to go out of business. Any home”owner” who uses an ARM because they can’t afford the full payment and plans to sell shouldn’t be buying a home, and any congressmen who want to help should have to do so out of their own pocket. That’s enough taxpayer money in itself.[/quote]

I could not agree more. The Fed has definitely fomented many of the problems of today with their meddling yesterday.

[Author]

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