I’m not wild about some of his other policies
But when it comes to waste, fraud, and mismanagement, Alan has impressed me for a while. I watched this hearing, and this is a pretty good six-minute summary:
If I were the Fed, I wouldn’t let Kohn anywhere near a microphone ever again
When it comes to this $1.2 trillion, I’m willing to bet that virtually zero of it was lent. Lending implies that there’s some chance of being repaid. When you loan to an insolvent institution, that’s called a donation.
The only issue I take with this report is this idea that there’s no cap on these gifts from the Fed. There’s a very clear cap, and that cap is zero. Congress — not the President, and certainly not Bernanke — gets to appropriate taxpayer funds. There’s no authority in the Federal Reserve Act of 1913 for making loans against worthless collateral, backed by the full faith and credit of the US Government.
