It's a tough job...but someone has to do it.

[GRG55]

Looks like Ben is in a tight spot these days. What a surprise...

Bernanke Tries to Define What Institutions Fed Could Let Fail

Aug. 18 (Bloomberg) -- Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes.

In the year since credit markets seized up, the 54-year- old Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac.

The lack of clearly defined limits may put the Fed's independence at risk as Congress discovers that its $900 billion portfolio can be used for emergency bailouts that might otherwise require politically sensitive appropriations and taxes.
More...

[metalman]

Re: It's a tough job...but someone has to do it.

Looks like Ben is in a tight spot these days. What a surprise...

Bernanke Tries to Define What Institutions Fed Could Let Fail

Aug. 18 (Bloomberg) -- Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes.

In the year since credit markets seized up, the 54-year- old Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac.

The lack of clearly defined limits may put the Fed's independence at risk as Congress discovers that its $900 billion portfolio can be used for emergency bailouts that might otherwise require politically sensitive appropriations and taxes.
More...

though that was crony paulson's job :mad:

Crony image dogs Paulson's rescue effort

July 17, 2008

ROBERT NOVAK novakevans@aol.com

As financial storm signals appeared the last 18 months, some Bush officials urged drastic reform of Fannie Mae and Freddie Mac. But according to internal government sources, Treasury Secretary Henry Paulson objected because it would look "too political." The Republican administration kept hands off the government-backed mortgage companies that are closely tied to the Democrats.

Paulson is a Republican, but as head of the Goldman Sachs investment bank, he had close ties with Democratic-dominated Fannie Mae. After prominent Democrat James A. Johnson left Fannie after eight years as chairman and CEO, he was named head of Goldman Sachs' compensation committee, helping set Paulson's abundant salary there.

That connection clearly was not enough for Paulson to consider recusing himself from dealing with the crisis threatening Fannie, Freddie and the whole American economy. He structured the bailout and was on the phone last weekend encouraging leading investment bankers to buy Freddie Mac bonds. Financial consultant Lawrence Lindsey, President Bush's former national economic director, told clients Sunday, "Surely things are somewhat amiss when a country's finance minister plays bond salesman for a supposedly privately owned company."

Testifying before the Senate Banking Committee on Tuesday, Paulson stressed the U.S. would purchase assets only if necessary. But relying on investment bankers could be awkward for Paulson because of indiscreet jubilation from his old company. "This is our bailout," a senior Goldman Sachs official told a Wall Street colleague this week, suggesting the firm will cherry-pick for mortgage bargains.

The only senior executive branch officials who expressed alarm about overextended Fannie and Freddie were former Federal Reserve Chairman Alan Greenspan and former Treasury Secretary Lawrence Summers, and their warnings were shrugged off.

It was worse on Capitol Hill. Former Rep. Richard Baker could not find a single House co-sponsor for his reform bill. He lost his bid to become ranking Republican on the House Financial Services Committee though he had seniority, and then retired from Congress to become a lobbyist. Republican Sen. Chuck Hagel had trouble finding other Senate supporters of Baker's bill.

Baker, Hagel and Sen. Richard Shelby, ranking Republican on the Senate Banking Committee, were rare members of committees with jurisdiction who took the issue seriously. The powerhouse Democratic overseers of the banking committees -- Rep. Barney Frank, Sen. Christopher Dodd and Sen. Chuck Schumer -- protected Fannie and Freddie.

Tuesday's hearing was more than an hour old when Hagel became the first senator to ask whether the well-paid officials and directors of the mortgage companies should be held accountable. "I'm not looking for scapegoats," Paulson replied.

Many of Paulson's non-scapegoats have traveled a familiar path from modest net worth to sudden wealth at the mortgage companies, especially Fannie Mae. Most have been Democrats, but token Republicans also have enjoyed the profitable ride. It is an old story, well described in "Crony Capitalism: American Style" by financial affairs reporter Owen Ullman in the July-August 1999 issue of the International Economy magazine. He portrayed rich "rewards" for fortunate insiders.

In that article, former Treasury official Peter Wallison of the American Enterprise Institute saw Fannie and Freddie posing a "prescription for financial disaster," similar to the savings-and-loan debacle a decade earlier. Will Paulson follow Wallison's advice and put the mortgage companies in federal receivership at the expense of shareholders? Wall Street tycoon Hank Paulson was the secretary of the treasury that Bush finally found on his third try. Now, grumbling has begun inside the Senate Republican Conference. The grumblers are asking whether Paulson will prove more than a crony in this crisis.

[GRG55]

Re: It's a tough job...but someone has to do it.

though that was crony paulson's job :mad:

Hard to argue with you.

We know that "insurgents" can be trained to use an RPG launcher, but can the Treasury Secretary be trained to use a "bazooka"? :rolleyes:

[seems the MSM is finally coming around to recognizing the inevitable about Fannie and Freddie]

Paulson's GSE `Bazooka' Shakes Investors He Aimed to Soothe

Aug. 21 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson's ``bazooka'' may be intimidating the same investors he intended to reassure...

...In lobbying for the rescue plan, Paulson told lawmakers that giving him authority to bail out the beleaguered lenders would reassure their private sources of capital.

``If you have a bazooka in your pocket and people know it, you probably won't have to use it,'' he told U.S. senators at a July 15 hearing in Washington...

...``The common shareholders will probably be completely wiped out,'' Paul Miller, an analyst at FBR Capital Markets, said in a Bloomberg Television interview. ``Preferred will also see a lot of pain. But that is up in the air because a lot of banks own the preferred. You put a lot of banks in trouble if you just wipe out the preferred also.''...

...There ``might have been a total failure'' at Freddie Mac's sale of bonds this week ``if there had not been this legislation,'' said Poole, a Bloomberg contributor. Paulson's plan ``was necessary under the circumstances,'' he said...
More [if you can stand it ]

[c1ue]

Re: It's a tough job...but someone has to do it.

If you have a bazooka in your pocket and people know it

You should wear fireproof underwear...

[jimmygu3]

Re: It's a tough job...but someone has to do it.

Hank, is that a bazooka in your pocket or are you just glad to see me?

[FRED]

Re: It's a tough job...but someone has to do it.

Looks like Ben is in a tight spot these days. What a surprise...

Bernanke Tries to Define What Institutions Fed Could Let Fail

Aug. 18 (Bloomberg) -- Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes.

In the year since credit markets seized up, the 54-year- old Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac.

The lack of clearly defined limits may put the Fed's independence at risk as Congress discovers that its $900 billion portfolio can be used for emergency bailouts that might otherwise require politically sensitive appropriations and taxes.
More...

Note that iTulip scooped Poole and Bloomberg on that story: iTulip Interview: Martin Mayer - July 2008

[jk]

Re: It's a tough job...but someone has to do it.

Hank, is that a bazooka in your pocket or are you just glad to see me?

..........