Don't know if you have been following what's going on with the Fed and banks, but apparently the Fed is exchanging Treasury Bonds for tens of billions of dollars of bad mortgage-backed securities in an effort to bail out the banking industry. The mortgage-backed securities are essentially worthless, so there is no way the Fed will ever recoup what it has given to the banks. It is essentially a backdoor bailout of the banking industry by taxpayers which is being administered by so-called "free market" Republicans who believe the market should be free for homeowners losing their homes and workers losing their jobs to overseas competition but not for the bankers who made horrific investment decisions.

The Post ran a good article about this today. This has a bigger impact than one might think... it's not just a bailout, it could alter the way the whole market works in the future. Sets a bad, bad precedent...

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/27/AR2008032703662.html

TheMeeper Wrote:
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> The Post ran a good article about this today.
> This has a bigger impact than one might think...
> it's not just a bailout, it could alter the way
> the whole market works in the future. Sets a bad,
> bad precedent...
>
> http://www.washingtonpost.com/wp-dyn/content/artic
> le/2008/03/27/AR2008032703662.html


Between the Fed doing this and Fannie Mae adding bad sub-prime mortgages to its portfolio, the Administration is essentially turning the Federal Government into the kind of Nanny-State Republicans are so fond of railing against. Pathetic.

Of course, this is in keeping with Bernanke's failed leadership of the Fed. He has abandoned the dollar and taken his eye off of inflation in order to cut rates which, in effect, do nothing more than increase the profit margins of banks while increasing the risk of inflation without easing the credit markets.

The Fed is a semi-private conglomerate comprised of 12 Federal Reserve Banks and private US banks (that have stock/shares in the Fed). The private banks elect two thirds of the Reserve Banks board of directors, while the President elects the seven members of the Board of Governors, who control the Fed. Between the President and the private banks electing who runs the Fed, it should come as no surprise that they are taking a vested interest in bailing themselves out of bankruptcy. It's another case of robbing Peter to pay Paul.

Loce, you say there is no way the Fed is going to ever recover the money from the banks...THEY ARE THE BANKS!!!



Edited 1 time(s). Last edit at 03/28/2008 08:11PM by inkahootz.

inkahootz Wrote:
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>
> Loce, you say there is no way the Fed is going to
> ever recover the money from the banks...THEY ARE
> THE BANKS!!!

The Fed is not a bank the way Bank of America is a bank. The Treasuries the Fed is supplying the banks are coming from American taxpayers. The worthless mortgage-backed securities the Fed is collecting now belong to American taxpayers. Should the mortgage-backed securities prove to be worthless, it will contribute to the national debt, not to the debt of private banks who should be the ones taking the hit.