“Insured depository institutions remain important participants in financial markets,” Treasury Secretary Paulson told the U.S. Chamber of Commerce yesterday, as if trying to illustrate our point, “but this latest episode has highlighted that the world has changed, as has the role of other nonbank financial institutions, and the interconnectedness among all financial institutions.”
Translation: Banks have always been borrowing from the Fed, but when the sh*t hit the fan this time, we chose to let brokerages and investment banks use the discount window too.
“These changes require us all to think more broadly about the regulatory and supervisory framework that is consistent with the promotion and maintenance of financial stability. Now that the Fed is granting primary dealers temporary access to liquidity facilities, we must consider the policy implications associated with such access.”
Translation: Now that we’ve lent a couple hundred billion bucks to these struggling nonbanks, we want to be sure they’ll pay us back.
Paulson went on to use words like “supervision,” “regulation,” and “oversight.” So don’t be surprised when Congress passes a new law forcing investment banks and brokers to let the Fed peruse their books.
In short, get ready for Sarbanes-Oxley, Part Two.
And another law may have been conceived during the amorous Bear Stearns bailout. Call this bastard love child “Baucus-Grassley.”
Sens. Max Baucus and Charles Grassley -- two members of the Senate Finance Committee -- are asking point-blank “how the government decided to front $30 billion in taxpayer dollars for the Bear Stearns deal.”
The Senate Finance Committee sent a letter to Secretary Paulson that, essentially, demanded every detail of the Fed-sponsored bailout by the end of the week.
“Congress has a responsibility to look at whether the taxpayers will lose money here” said Sen. Grassley, “And what kind of precedent this sets for the federal involvement in other direct and indirect ways, and whether top executives will come out better than the rank-and-file workers who weren’t in the room negotiating the deal.”
Behold! Our fine democratic institutions at work.
Translation: Banks have always been borrowing from the Fed, but when the sh*t hit the fan this time, we chose to let brokerages and investment banks use the discount window too.
“These changes require us all to think more broadly about the regulatory and supervisory framework that is consistent with the promotion and maintenance of financial stability. Now that the Fed is granting primary dealers temporary access to liquidity facilities, we must consider the policy implications associated with such access.”
Translation: Now that we’ve lent a couple hundred billion bucks to these struggling nonbanks, we want to be sure they’ll pay us back.
Paulson went on to use words like “supervision,” “regulation,” and “oversight.” So don’t be surprised when Congress passes a new law forcing investment banks and brokers to let the Fed peruse their books.
In short, get ready for Sarbanes-Oxley, Part Two.
And another law may have been conceived during the amorous Bear Stearns bailout. Call this bastard love child “Baucus-Grassley.”
Sens. Max Baucus and Charles Grassley -- two members of the Senate Finance Committee -- are asking point-blank “how the government decided to front $30 billion in taxpayer dollars for the Bear Stearns deal.”
The Senate Finance Committee sent a letter to Secretary Paulson that, essentially, demanded every detail of the Fed-sponsored bailout by the end of the week.
“Congress has a responsibility to look at whether the taxpayers will lose money here” said Sen. Grassley, “And what kind of precedent this sets for the federal involvement in other direct and indirect ways, and whether top executives will come out better than the rank-and-file workers who weren’t in the room negotiating the deal.”
Behold! Our fine democratic institutions at work.
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