David Freddoso has an an excellent piece explaining the confusing matter of the Federal Reserve's unprecedented Bear Stearns bailout (or, perhaps more accurately, the J.P. Morgan subsidy). It makes simple a complicated subject. "In short, this is the mother of all government subsidies--a non-legislative appropriation that doubles the size of all this year's congressional pork projects combined," Freddoso writes on National Review Online. "Without so much as a vote of Congress, taxpayers are to buy securities of undetermined value for $29 billion--roughly Panama's GDP, or the Federal Reserve Bank's entire annual profit. They take this enormous risk so that JPM, a company worth $146 billion, has enough liquidity to make a major and profitable acquisition for next to nothing. JPM is more than happy to take on Bear's book of client and counterparty accounts--these were probably never in danger of being lost, and it's great business for JPM. The ones being rescued are Bear's bond-holders. They keep their shirts. The stockholders at least keep their socks. The profits from the good times are retained, and the losses are socialized." The complexities make my head spin. The illegalities make my stomach turn. A non-legislative appropriation?

In the late 70s, we bailed out CHrysler. Of course, that was in the form of loan guarentees, which Chrysler paid back.

Perhaps we can keep this company going long enough for them to send their jobs oversees as well.

Be well,

Sponge

I wonder who has standing to file suit over this? Would Congress have to protest? Not that he would, but could the Attorney General prosecute? Someone should do something.

I don't hear Ms. Pelosi or the Honorable Harry from Nevada protesting so there must be tacit agreement with Congress. I think they didn't want to face the downside of economic turmoil had Bear Stearns been cut adrift. It goes far beyond the Bear Stearns stockholders.

"A non-legislative appropriation?"

Sounds like weasel talk to me.

Hey, what do they care? It's not their money. And they can always keep taxing and borrowing to make up the differences. That is, if they ever care about them.

I guess the point I draw from this is that it would have been a horrible scandal had congress appropriated this money. But it's worse than that. An unelected body with no accountability to taxpayers and no jurisdiction in such matters gave this money away. The precedent is scary. We have crossed a Rubicon.

Clearly an abuse of power.

This should come as a surprise to no one. The Administrative Agencies have stunning regulatory power, can pass regulations that exceed any authorities they have or should have (and at worst are unconstitutional), and very little is ever done about it. The simple reason is that these agencies wield their heavy-handed regulations in a way that forces the regulated community to acquiesce or face the full force of the Justice Department. Therefore, most of the regulated community lives with it (they're mostly businesses who have better things to do than conduct a lenghty court battle with a superior foe), pay any fines in a settlement agreement, and continue to prop up these ridiculous excuses for "government".

I fully expect this government to continue to grow to insane levels, and there doesn't appear to be a damn thing that we can do about it.

Once again crooks of a feather flock together. The idiots who ran Bear into the ground should be in jail, not receiving welfare from the government.