“Federal Reserve Chairman Ben S. Bernanke is basing hundreds of billions in emergency lending on credit ratings from companies that gave AAA grades to toxic securities. The Fed has purchased $308.5 billion in commercial paper and lent $631.8 billion” based on appraisals by the bond rating agencies Moody’s, Standard & Poor’s, and Fitch.  So reports Bloomberg News.

Before the financial crisis, we repeatedly warned in vain that these ratings agencies were failing in their job, and that regulations that prevented independent companies from competing with them should…

Read the full story

“The dollar yesterday staged one of its biggest one-day drops against the euro and fell to a 13-year low against the Japanese yen as near-zero interest rates and the Federal Reserve’s plan to print vast sums of cash dilute the value of the greenback,” reports the Washington Post today.

“On Monday, the Fed cut . . . the federal funds rate, at which banks lend to each other, from 1 percent to a target range of 0 percent to 0.25 percent, and effectively vowed to print as much…

Read the full story

The Treasury Department wants the federal government to effectively buy up all mortgage loans in America, by selling treasury bonds to buy up mortgage-backed securities. In exchange, lenders would have to charge a ridiculously low interest rate of 4.5% for a 30-year mortgage, which is lower than inflation in many years, and way lower than people with even perfect credit receive now.

The Treasury proposal will put taxpayers on the hook for tremendous potential losses if borrowers default, with little upside,…

Read the full story