The Inside Scoop on the Bear Sterns Bailout

Robert Novak, one of my favorite political commentators reveals the inside scoop on who made the decision to bail out Bear Sterns and why there is cause for concern. He says the decision was “approved in private by unelected officials” and reports that “a Fed official conceded privately this week that “we may have crossed a line” in jumping into Bear Stearns.”

His column today starts out making this claim:

The Federal Reserve’s unprecedented bailout of Bear Stearns was crafted not at the White House or Treasury, but in secret by a New York central banker whose name is unknown to Washington power brokers and was a Clinton administration presidential appointee.

Later on he says:

If they had blundered into financial failure, the community banks complained, they would not be bailed out, but instead investigated and prosecuted. “Too big to fail,” therefore, becomes “too big to be punished.”

For those not familiar, Novak is a respected conservative journalist who is noted for bringing to light the inner workings of the “Establishment”. So, it’s not paranoia that I’m passing along here.

Cramer vs. Kramer: A Battle of Comedy

Jim Cramer on Bear Sterns:

Kramer goes crazy (from Seinfeld):

Bear Sterns Collapses, Fed Cuts Discount Rate

Bear Sterns is sold for $2/share. What a collapse – consider that in January 2007 its shares sold for $171.52. Am I being paranoid here? Greenspan says this could be the worst financial crisis since WWII, the President is huddling with the big dogs today to discuss the financial crisis and in a rare weekend move the Fed cut the discount rate:

In an attempt to stem the bleeding on Wall Street, Federal Reserve on Sunday lowered the discount rate to 3.25% from 3.5% — a move “to bolster market liquidity and promote orderly market functioning.”

The discount rate is the rate charged to banks and other depository institutions for borrowing short-term funds directly from their regional Federal Reserve Bank.

Action on the Federal Funds rate is due this week as well.

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