 Quote:
Originally Posted by d
Hussman suggest, but does not so clearly state, that the Fed acted outside of its authority in this situation; however, the authority seems clear under the Federal Reserve Act, section 13(3): "In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal reserve bank, during such periods as the said board may determine, at rates established in accordance with the provisions of section 14, subdivision (d), of this Act, to discount for any individual, partnership, or corporation, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal Reserve bank"
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I think in one of his last commetaries he did clearly state that he thought they acted illegaly. I'm not sure exactly what he thought was illegal. I'm not really defending him. You may be entirely correct that this gives them the authority for the deal.
My fear is not the legalities, IMO it created Moral Hazard and we might all pay for that. A large mortgage bailout seems to be next on the plate. I wonder if the FED will be in support of that?
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