Stearns was the 2nd bailout in 7 months - not the 1st

[ensho]

http://counterpunch.com/


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While mainstream media called the Bear Stearns bailout the first brokerage bailout since the Great Depression, in truth it was the second in seven months.

The first brokerage bailout came without all the media fanfare because it arrived not on the wings of a public announcement but in five pages of indecipherable Fed jargon addressed to the General Counsel of Citigroup.

Here is the effective message sent by the Federal Reserve to Citigroup in its letter of August 20, 2007: now that we have allowed you to become both too big to fail and too big to bail by repealing the depression era investor-protection law known as the Glass-Steagall Act at your mere beckoning, we have to bend more rules to keep you afloat. So, for example, the rule that says the Federal Reserve is not allowed to lend to brokerages, just banks, from its discount window can be tweaked for you by lending up to $25 billion to you and then we'll let you lend it to your brokerage arm. The Federal Reserve Act rule that says a bank can't loan more than 10% of its capital stock and surplus to its brokerage affiliate, we'll let you go as high as about 30% and say it's in the public interest.

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Before there is a complete breakdown, Congress must quickly address the five key reasons we have today's mess on our hands:

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don't hold your breath

[aquart]

1. Yet Citigroup is still considered vulnerable.

Interesting that the biggest crooks fall first.

[Orrex]

3. I wish they'd get off my back about my credit card due-date

I mean, if they can fuck up ~$10 billion with near impunity, you'd think that they wouldn't get so upset about my monthly $40.

[Democrats_win]

2. Holy *^%$^! Now Citibank is owned by Al Queda. (Well, almost)

[enid602]

4. fall

This is like watching the Soviet Union implode almost 20 yrs ago. I wonder if our society/government will be as compassionate and enlightened as Russia's once our system has failed.

[Supersedeas]

5. an independent media -- what's that