By EDMUND L. ANDREWS
WASHINGTON — The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true. But that happy situation, aided by ultralow interest rates, may not last much longer. Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.
By GRETCHEN MORGENSON
‘A government report on the bailout of A.I.G. is must reading for taxpayers looking to know why the $182 billion “rescue” is the most troubling episode of the financial disaster.’) … The Fed, under Mr. Geithner’s direction, caved in to A.I.G.’s counterparties, giving them 100 cents on the dollar for positions that would have been worth far less if A.I.G. had defaulted. Goldman Sachs, Merrill Lynch, Société Générale and other banks were in the group that got full value for their contracts when many others were accepting fire-sale prices.
By TOM RAUM (AP)
WASHINGTON — Suddenly the Federal Reserve is everybody’s punching bag. … Strip the Fed of its bank regulation powers, some in Congress are demanding. Get probing audits of its behind-the-scenes operations, others say.
Phi Beta Iota: It is absolutely clear that both the Secretary of the Treasury (going back to the Clinton era, each of them) and the Chairman of the Federal Reserve (same)–and every Member of Congress “standing pat,” have committed high crimes and misdemeanors and merit public censure. At some point a public commission is going to have to re-possess the public assets transferred illegitimately–criminally–to Goldman Sachs and others. Creative Destruction should have been the order of the day, with the government insuring American homeowners and renters from the bottom up. This entire sorry episode is the last nail in the coffin of eilte “rule by secrecy.”