Wall Street Bailout

[DERBENSKI]

'clobal'

My initial reaction was to blame the Federal Reserve. Specifically because they are supposed to be charged with sound banking and preventing asset bubbles. If they find that banks are making unsound loans, they are supposed to close the discount window to those banks.

However we cannot ignore a few facts that have legislated the creation of money away from the Federal Reserve. Enter Humphrey Hawkins legislation which makes Federal Reserve policy subject to the President. Enter Fannie, Freddie and Wall Street Investment banks not subject to the Federal Reserve and in addition, the Community Reinvestment Act.

When you legislate all these things around the Federal Reserve then the Federal Reserve has been legislated out of authority to do anything because they can be trumped by another entity.

I am not saying the Fed was blameless by any means, just that they have been watered down and legislated out of a full position of power over monetary policy.

I am not saying the Fed was blameless and should have done more to stand in the way, but they are subject to the president and full employment over monetary policy.

Unfortunately this left nobody responsible to point the finger at when crap hit the fan. Had the Fed not been legislated out of its role, things might have been different because it would be Feds arse on the line. The result of legislating the Fed out is now we have fingers pointing in five different directions with no sole entity to blame.

Derb