Redstate

Posted at 8:51am on Apr. 3, 2008 Mortgage Relief: Senate Republicans Blink

An FHA Expansion coming?

By blackhedd

Following up my story here on the movement in the Senate Banking Committee to come up with mortgage-relief (read, bailout) legislation: the Republicans blinked.

Under what appears to have been pressure from Republican leadership, Senator Richard Shelby of Alabama, the ranking minority member on the banking panel, made a deal with Senator Dodd of Connecticut to accept preliminary steps in the direction of a legislated mortgage bailout.

Much more…

Posted in bailout | Dodd | Economy | FHA | mortgage | New Deal | senate | Shelby — Comments (20)/ Email this page » / Read More »

Posted at 6:27pm on Apr. 2, 2008 "That Was an Extraordinary Thing To Do"

"I thought about it long and hard"

By blackhedd

Fed Chairman Ben Bernanke testified in Congress today about his team's handling of the Bear Stearns collapse, story here.

I'm among the many people who have written at length about how the Fed formed an external entity funded with $29 billion, in order to purchase mortgage-backed securities from Bear.

Here's what the Chairman had to say about that part of the episode:

``That was an extraordinary thing to do, I thought about it long and hard,'' Bernanke said, referring to the funding. ``I hope this is a rare event, I hope this is something we never have to do again.''

I'm going to take Bernanke at his word on this. The Federal Reserve (unlike the Treasury, at various points in history) has never exhibited a taste for exceeding its charter to anchor the nation's money supply and its payments system.

Extraordinary times require extraordinary actions, from extraordinary men.

-Francis Cianfrocca ("blackhedd")

Posted in bailout | Bear Stearns | Bernanke | Economy | federal reserve — Comments (4)/ Email this page » / Read More »

Posted at 7:16am on Mar. 29, 2008 More on The Federal Reserve's St. Patrick's Day Massacre

The New York Fed Puts on a $29 billion Trade

By blackhedd

Two days ago, I wrote here on the widely-reported $30 billion loan that the Federal Reserve made as part of brokering the acquisition of the Bear Stearns Companies by JP Morgan Chase (the "St. Patrick's Day Massacre").

I now have much more information on what this deal is all about. I guessed quite wrong about the deal structure. The $30 billion loan is not a term repo as I originally thought. Nor is it likely to generate monetary losses for taxpayers. (In fact, the opposite is true.)

But it is something bold and different that's worth understanding. In fact, it's a major milestone event in the monetary and financial history of the United States.

Before I launch into this, let me set the context by reminding you why all this financial mumbo-jumbo is important: it's because of politics. Even before the full effects of the credit crisis make themselves felt, we're already deeply into a paroxysm of "the sky is falling! What is the government going to do about it?" I'll be posting as much as I can on this subject in the coming days and weeks, because there is at least as much danger to the real economy from a mad dash toward new regulations and Federal involvement, as there is from the financial-system disorders themselves.

Keep reading...

Posted in bailout | Bear Stearns | Economy | federal reserve | JP Morgan Chase | SIV — Comments (49)/ Email this page » / Read More »

Posted at 11:48am on Mar. 15, 2008 An Important Note About the Bear Stearns Situation

It's Not about saving the company

By blackhedd

There's an important point that should be emphasized about the rescue of the Bear Stearns Companies that was announced yesterday morning. (We debated it vigorously here.)

Much of the debate centers on whether the Federal Reserve improperly used taxpayer dollars to save some very wealthy men from the consequences of their bad decisions.

But this is a misreading of both the situation and of the rescue. Herewith some clarifications.

More...

Posted in bailout | Bear Stearns | Economy | federal reserve — Comments (66)/ Email this page » / Read More »