But suddenly the Fed is undergoing radical "mission creep" ... Did the bank "lend" $29 billion to Bear Stearns, or did it, in effect, buy some of the most problematic securities owned by Bear? ... Today's argument is that Bear Stearns was so connected to the financial system in opaque ways that no one could guess the radiating consequences of its failure [i.e. "too big to fail"] ... The Fed has no mandate to be the dealmaker for Wall Street socialism. The Fed's mission is to preserve the currency as a store of value by preventing inflation ... The Fed should not try to produce this or that rate of economic growth or unemployment ...But I especially like what George Will had to say next. With the bailouts, our nation's financial elites are - and should be paid like - civil servants.
If Congress cannot suppress its itch to "do something" while markets are correcting the prices of housing and money, Congress could pass a law saying: No company benefiting from a substantial federal subvention (which would now include Morgan) may pay any executive more than the highest pay of a federal civil servant ($124,010). That would dampen Wall Street's enthusiasm for measures that socialize losses while keeping profits private.For those of you inclined toward cynicism, George Will is really painting picture of our nation's financial leaders as Wards of the State. We'll be sure to discuss on Saturday.
- Mark
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