Bailout Hypocrisy

Thud. That was the sound of the other shoe dropping. In response to severe problems in the credit markets, thanks to years of government intervention, the Federal Reserve, the government's counterfeiter and chief culprit in the current crisis, has opened its discount window to the investment banks. Interest rate: 2.5 percent. Until recently, only commercial banks could borrow money from the Fed. But now investment banks may also -- and here's the kicker: They can put up shaky mortgage-backed securities as collateral. Which means the American people are potentially on the hook for those loans. Should they go bad, we Americans will pay either in inflation-induced higher prices or higher taxes. Investment banks that may have invested in bad mortgages are already taking advantage of the new opportunity. Is this a great country or what?

The rest of this week's TGIF, "Bailout Hypocrisy," is at the Foundation for Economic Foundation website.