Unconstitutional Federal Reserve to be Given Major New Powers!!!

Editor's Note: This is an admission that the Bear bail out was illegal and that the Fed had no authority to bail out a security broker! The Emergency Banking Act of 1933 restricted government assistance to commercial banks. Bear Stearns is primarily engaged in business as a securities broker and dealer. Now, the government wants to give the Federal Reserve the power to do what they've already done...illegally!

The Bush administration is proposing a sweeping overhaul of the way the government regulates the nation's financial services industry from banks to mortgage brokers and insurance companies.

The plan would give major new powers to the Federal Reserve, according to a 22-page executive summary obtained by The Associated Press.

The Fed would be given broad authority to oversee financial market stability. That would include new powers to examine the books of any institution deemed to represent a potential threat to the proper functioning of the overall financial system.

The proposal, which will be outlined Monday in a speech by Treasury Secretary Henry Paulson, is certain to set off heated debates within different sectors of the financial services industry and in Congress, where some Democrats are likely to complain that the proposal does not go far enough to crack down on abuses.

The administration divided its recommendations into short-term goals that could be adopted quickly, intermediate recommendations and an "optimal" regulatory framework, which contains a radical restructuring of how the government supervises banks and other financial institutions.

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Comments

[Randi]

Although JP Morgan issued the bailout, the Fed was behind it! They exchanged Bear Stearn's plunging mortgages for the Fed's Treasuries (via JP Morgan). Who knows what the mortgages were really worth? They were AAA, but we know the ratings are a sham. And we don't know how much those mortgages will be worth at the end of the 28-day exchange period. Probably less. What happens then? Probably the Fed will just allow another rollover. For how long? Those mortgages are not going back to today's value, ever.