The vote to open the window to IBs was taken before the deal was made for Bear.

The Fed’s active involvement in this transaction without disclosing this material piece of information (that would have instantaneously blown the deal up) is outrageous.

In effect The Fed has stolen $30 billion (now $29 billion) from the US Citizens and locked it up in an LLC – an “off balance sheet vehicle” just like Enron used – after conjuring the failure of Bear.

Yes, Bear was going to go down Monday. But so was Lehman, and by opening the Window, they stopped that.

Further, The Fed’s actions were and are clearly outside of their authority as delegated by The Federal Reserve Act of 1913.

This crap has to be stopped kids. IF we contaminate our Treasury Bill repository (the largest piece of which, in the US, resides in The Fed) we run the risk of provoking capital flight and a collapse in our currency – and ultimately our economy.

All spending bills must originate in The House, by our Constitution. The Fed has no authority to “spend” $29 billion of our money without an explicit allocation by Congress. Period.

This demands investigation and, if the facts are as they appear, impeachment.

Yes, I said impeachment, as The Executive was clearly (by their own admission) involved.

Petition To Fix This and The Blog where this is all outlined

While I’m sure BSC people feel slighted, they’re way off base for two reasons.

Firstly, the Fed didn’t have it in for them. They were just the first IB to fail, and thus forced Fed action. The Fed did their best to put in place a guarantee ASAP (the main reason they went to JPM was because it was logistically easier to go through a regulated bank than spend a few days figuring out how to bail out BSC directly). If Lehman had failed before BSC, then they’d be the one facing BK, while BSC would have been saved. If BSC feels they were wronged, they should ask themselves why they were so incompetent that their IB went belly up first while others managed to hold on. That’s the real reason for their current predicament.

Secondly, BSC shareholders should be thankful that they’re getting $10/share. If it wasn’t for the Fed, they wouldn’t even get that. I’m still of the opinion that the Fed should have done nothing and let them go all the way to bankruptcy (even if that means Lehman and others would have quickly followed suit). BSC’s problems have been known since last summer. Their stock price had already fallen significantly by the beginning of this year. If you still had BSC stock, you weren’t some poor investor just trying to park your 401k in a safe company with no clue about the underlying turmoil in the company. You were a vulture investor speculating on distressed equity for a big payout. Such speculators should be thanking their heavens they’re getting $10/share instead of the $0 that is their rightful due.

I know some say that it was to prevent problems to other primary dealers, problems caused to them BY BSC’s problems – but if the window had been open to BSC maybe BSC’s problem would have liquidated away and there would have been no problems for other primary dealers.

Its all speculation – but to me it looks like they wanted to make an example of BSC – and THEN put, what they see as a fix to the liquidity of primary dealers, in place.

Its playing favorites IMO – so much for wanting to protecting the system.
-K

Oh, and now that I look at the post, the incorrect usage of “it’s” came in a quote (which I assure you was cut and pasted) from Dealbreaker, which (unlike me) is a real organization with multiple writers and a large number of display ads, But no, you accuse me of paying insufficient attention, yet you didn’t bother to read the post closely before criticizing me.

I do “understand” the proper usage of its and it’s.I have repeatedly told readers I am bad at typos. That is one reason I left the securities industry. They place a premium on that skill.

It is rather offensive that you decide to attack me over this. Other readers try to be helpful in pointing out typos. And if you had ever published an article, you would know that journalists and writers, unlike bloggers, have everything edited by a line editor (there is often a separate editor for content/style, which shows how specialized a skill this is). They don’t have to worry about typos when they are trying to meet deadlines.

I also, and have said before, that I am not good at proofreading, A reader told me last night I had typed the date in incorrect. He didn’t presume that I was unable to use a calendar.

I have in fact been tested as not being good at typos, and that was before the days of spell check (and I also know how to spell quite well), I have terrible manual dexterity and type slowly as well.

Now, do you just want me to quit posting? Most of what I write is news driven. I think it is more important to my readers to be timely than write 15% less or be considerably later by virtue of being meticulous. Or you if it bothers you that much, you can pay for a line editor.