Facing the possibility of a serious financial meltdown, Federal Reserve Chairman Ben Bernanke jumped in over the weekend to help engineer J.P. Morgan Chase's fire sale purchase of Bear Stearns & Co., a Wall Street investment bank battered by its heavy involvement in mortgage-backed debt, while the troubled firm rushed to sell itself to a more stable suitor.
This action came on top of a broader assistance package unveiled Tuesday that included the Fed taking $200 billion in toxic mortgage-backed securities off the books of major firms in return for U.S. Treasuries — a terrible trade-off for taxpayers but apparently necessary to keep the financial system functioning.
Both moves are extraordinary and a measure of just how worried the Fed is that the nation's steadily worsening debt crisis will spin out of control.
When will this government ever run out of money or places to borrow from? It is unreal that we, the taxpayers, will end up paying for the losses of these banks and their chief execs will get richer yet. That is what seems to be happening though.
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