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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Peter V who wrote (123174)	5/15/2008 1:13:16 AM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 306849

Fed Balance Sheet Worries Volker (my, my, he's getting feisty lately!) online.wsj.com Fed Balance Sheet Worries Volcker Ex-Chairman Sees Fed's Independence Hurt by Credit Steps By GREG IP May 15, 2008; Page A3 Former Federal Reserve Chairman Paul Volcker said the Fed's independence could be hurt by the wide variety of assets it has taken onto its balance sheet to combat the credit crunch. Since the credit crisis began last August, the Fed has expanded the volume and types of loans it is willing to make to banks and securities dealers -- loans that are backed by a wide variety of collateral from subprime mortgages to student loans. It has so far not directly purchased such debt. It did, however, make an unprecedented loan of $29 billion to facilitate the sale of Bear Stearns Cos. to J.P. Morgan Chase & Co. Mr. Volcker, testifying on responses to the credit crisis at the Joint Economic Committee of Congress Wednesday, said such activity "has not been the tradition of the central bank and I think that is an issue for the long run for the independence of the central bank. If it is going to be looked to as the rescuer or supporter of a particular section of the market, that is not strictly a monetary function in the way it's been interpreted in the past."<snip> <snip>Mr. Volcker laid part of the blame for the current crisis at the feet of banking regulators, including the Fed. "Why were [the banks] permitted to set up those off-balance-sheet entities that may or may not have had some formal relationship with the bank? They were not regulated and [banks] didn't hold an adequate amount of capital against them. Why did that happen after the experience of Enron?"<snip> Damn fine questions....why hasn't Clowngress asked it, they've met with Soylent Greenspan and Bernanke frequently and had the opportunity......