More Bernanke Lies and Lawlessness: Bear Stearns

Posted 2009-04-23 15:14
by Karl Denninger
in Federal Reserve

Yet again....

Latest losses on the Bear loans that The Fed acquired (which we'll get to momentarily):

Commercial has been written down 28%
Residential write downs and outright losses of 38%

Both so far.

If you remember back last year we were told that The Fed would not lose money on this transaction by Bernanke himself:

In his testimony Wednesday, Bernanke said he did not believe the central bank would lose money on the deal and said it could make money. He said he did not consider the transaction a bailout because of the losses sustained by Bear Stearns shareholders.

So what is it now Ben? Wanton and intentional destruction of money?

And by the way, The Federal Reserve Act of 1913, as I have repeatedly noted, permits The Fed to make loans to literally anyone under "unusual and exigent circumstances" (so long as they are fully collateralized) but does not permit, under any circumstances, the acquisition of ownership interest in other than securities guaranteed by the full faith and credit of The United States.

This sort of loss is exactly why The Fed is prohibited from taking those actions - it is for the specific purpose of protecting the taxpayer's interest and Treasury from The Fed, either through malfeasance, misfeasance or any other reason, bypassing The Constitution in that all appropriations must originate in The House.

It is my considered opinion as I have stated from the day this bailout was announced that The Fed is in violation of the black letter law of The Federal Reserve Act and that all of The Fed governors need to be held to legal account by Congress and removed from office for permitting this wanton, reckless and unlawful series of actions without proper and prior Congressional review.

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