A New Role for the Fed: Investor of Last Resort

[groovedaddy]

WASHINGTON — The mighty Federal Reserve is being stretched to its limits, both in the range of problems it is being asked to fix and in its financial firepower.

The central bank has also transformed itself almost overnight into the Fed Inc. by essentially taking over American International Group after already taking on hundreds of billions of dollars in mortgage securities to help ailing financial institutions.

Instead of just setting monetary policy in its Ivory Tower-like setting, the Fed now must wear several hats — that of insurance conglomerate, investment banker and even hedge fund manager.

“This is unique, and the Fed has never done something like this before,” said Allan Meltzer, a professor of economics at Carnegie-Mellon University and author of a sweeping history of the Federal Reserve. “If you go all the way back to 1921, when farms were failing and Congress was leaning on the Fed to bail them out, the Fed always said ‘It’s not our business.’ It never regarded itself as an all-purpose agency.”

http://www.nytimes.com/2008/09/18/business/18fed.html?_r=1&th&emc=th&oref=slogin

[screembloodymurder]

1. The Fed is private!

I say bullshit on letting them use our money to bail out failed financials. They do not have authority to do this. It is not legal.

[groovedaddy]

2. You must have forgotten - NOW anything Bush says is legal is legal

torture, preemptive wars, wire tapping without a warrant,...
This is our country on Fascism!

[angryfirelord]

3. Re:

The Federal Reserve was created for one thing: Establish a bank cartel to screw the American people. I'm reading a book called The Creature from Jeckyll Island and it shows how the Fed came into existence by essentially taking control over the money supply. If we allow more bailouts and reckless spending, the government will essentially seize control over everything and the dollar will crash.