Remarks From Remarksman

March 13, 2008

Who is the Fed Bailing Out?

Filed under: Uncategorized — BrianB @ 5:50 pm
Tags: , , ,

It’s not obvious to me or, I suspect, to most US citizens what the Federal Reserve Bank’s recent decision to lend $200,000,000,000 ($200 billion) to banks and other financial firms means.

The Fed created a new division of itself in order to make these loans, and the loans are for 28 days, instead of the overnight loans that the Fed has traditionally provided. The Fed will accept mortgage backed securities, the main source of the current credit problems, as collateral for those loans. Steven Pearlstein thinks it was a smart move to everyone’s advantage, as he explains in this Washington Post column.

Dean Baker disagrees. He wrote an interesting blog article a couple days ago wondering why people weren’t being more critical of the move. Then he wrote another article after Pearlstein’s column came out.

I’m with Dean Baker on this. If I remember correctly, the Bush family has a big connection to the Carlyle Group, one of the hedge funds mentioned as needing bailing out in the Pearlstein column. Can you say, “Taxpayer funded bail-out of the Bush family’s massive fortunes?”


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