Bernanke Says Fed Would Welcome ‘Full Review’ of AIG Aid by GAO
I applaud this choice but I want to make sure we are clear that there are major questions about giving “back-door bailouts” to Goldman Sachs and a few foreign banks by giving 100 cents on the dollar for credit-default swaps AIG held. Other counter-parties did take a discount or “haircut” on those debt insurance contracts so there is some explaining to do on those decisions.
To this point both Treasury and the Federal Reserve do not see any problem with their choices on this matter and the amount of U.S. tax payer money they used to bailout this insurance company. Honestly, the financial products division did not need to be bailout out, their normal insurance operations where is separate subsidiaries so even if that company failed they would still be able to make good on their other obligations. The reality is that major investment banks and foreign banks did not do proper due diligence on the ability of AIG to make good on this insurance in the event of a economic downturn and they should of been made to pay in a true free market system.
Bloomberg, New York - Federal Reserve Chairman Ben S. Bernanke said the central bank would welcome a “full review” of its aid to American International Group Inc. by congressional auditors and make all necessary records and personnel available to them.
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Bernanke Grilling May Weaken Case for Expanded Fed Oversight Powers
Editor’s Note: After the report of the internal Fed email about disclosure of losses at Merrill Lynch being delayed, it does possibly impact the credibility of the Federal Reserve. My biggest reservation is with the Fed who dictates monetary policy, having the ability to deal with systematic risk. The Fed has a track record with financial crisis es come along, to lower interest rates to artificially low levels, bailout the bad actors and then pump money into the system to stimulate through the crisis.
Yes it does get us through the tough times but I see it as the us collective wanting to treat the symptoms and not the cause. The easy way out is usually not the best way, especially in the long run. With this track record in place, we are now talking about giving the authority who practices lose monetary policy the ability to selectively pick the winners and losers when they usually create the problem from the initial monetary policy. I hope others understand this and agree that more concentrated power is not better.
News (Bloomberg):
Chairman Ben S. Bernanke’s grilling by legislators over Federal Reserve conduct in Bank of America Corp.’s takeover of Merrill Lynch & Co. may reduce the odds the central bank will win new powers in a regulatory overhaul.
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Bernanke Warns Deficits Threaten U.S. Financial Stability
Why is it that we have to go with far to realize in a system where you issue debt to issue money, deficits actually matter. We have known this for decades, but now some how we have now figured this out. Obama is going to either cut back his budgets or make serious cuts in other places to make his goals happen. The other option that I have been looking into is changing the way we “issue” our money. The days of the private Federal Reserve are numbered and I see the “Greenback” coming back.
News (Bloomberg):
Federal Reserve Chairman Ben S. Bernanke said large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall.
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Bernanke says recession to be “long lasting” in U.S.
I am glad that our private central bank’s Chairman has come to reality along with the rest of us. In my opinion, this is really the soft-depression we should of had after the dot-com bubble and 9/11. The reason is will be long lasting is because of the extent of the malinvestment that took place from 2001-2007.
Because of our real estate asset bubble, much of the economy (upto 35% by some estimates) reallocated resource to areas that were not sustainable and now that it has finally dawned on people that not everyone can be a banker or real estate agent, it will take time for jobs to be created in areas that will have long-term and sustainable.
News (Bloomberg):
Federal Reserve Chairman Ben S. Bernanke said the collapse of U.S. lending will probably cause “long-lasting” damage to home prices, household wealth and borrowers’ credit scores.
“One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be,” the Fed chairman said today in a speech at the central bank’s community affairs conference in Washington. “The damage from this turn in the credit cycle — in terms of lost wealth, lost homes, and blemished credit histories — is likely to be long-lasting.”
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Bernanke says Fed has exit strategy from credit policy
Well I hope he will be able to keep his word on that. I think right now if all the loans were reigned in right now we would have a full collapse and I am not sure how we are going to write-off all these losses and still keep these banks in business?
News:
Federal Reserve Chairman Ben Bernanke on Friday said the Fed’s buying of longer-dated U.S. Treasuries would “taper off” when the economy no longer needed help, allowing the Fed to cease its emergency support.
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Its Stimulus check time again - part deux
Yay, just what I needed, it was starting to get pretty tight in my household. I was wondering how I was going to afford the new video games coming out this year or more money to go drinking. Come on people, only more consumption is going to get us out of this mess. Forget creating middle class jobs or actually keeping a budget. You need to go do your part and take on more debt so we can grow and consume so we can keep our 70% consumption driven GDP supermacy. Remember, when you bailout everyone, you in affect bailout no one.
Reuters Release:
U.S. Federal Reserve Chairman Ben Bernanke told Congress on Monday that another wave of government spending may be needed as the economy limps through what could be an extended period of subpar growth.
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Fed Chairman Bernanke weighs limiting consolidation and asset bubbles
First off, I don’t think Bernanke can do anything at this point to stop the declining of prices. What I want to know is how do get to a mindset where you actually think that you want to try and stop this normal operation of the market? Personally I find the attitude, arrogant. For someone who controls interest rates and debt based liquidity to think that they would have enough power to affect and multi-trillion dollar economy.
shrinking incomes and shrinking credit is the main issue and giving credit to banking institutions is not going to make borrowers more creditworthy or raise peoples incomes so they can support the current debt levels. If you debauch a currency during a financial crisis while trying to prevent the decline, you really are not accomplishing anything. Your rewarding the speculators and hurt the savers? Even when saving money is one of the biggest problems in this country.
News Piece:
Federal Reserve Chairman Ben S. Bernanke said the central bank will consider discarding its long- standing aversion to interfering with asset-price bubbles and warned that the banking business may be concentrated in too few companies.
Officials should review how supervision and interest rates can minimize the “dangerous phenomenon” of bubbles in housing, stocks and other assets that risk bringing the financial system and economy down with them when they burst, Bernanke said.
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