Grassley Asks Whether Paulson Pushed Fed Into Bear Stearns Deal

[girl gone mad]

Source: Bloomberg.com

Grassley Asks Whether Paulson Pushed Fed Into Bear Stearns Deal

By Brian Faler and Peter Cook

March 27 (Bloomberg) -- The top Republican on the Senate Finance Committee said he wants to know whether Treasury Secretary Henry Paulson pressured Federal Reserve Chairman Ben S. Bernanke into brokering the deal that allowed the sale of Bear Stearns Cos. to JPMorgan Chase & Co.

Iowa Senator Charles Grassley, who will be involved in one of two congressional inquiries into the deal, asked in an interview with Bloomberg Television yesterday whether Paulson pushed Bernanke into authorizing the $29 billion loan needed to make the sale or if the agreement was the result of an ``independent Fed decision.''

``We want to know the extent to which Paulson was involved in the deal,'' Grassley said. ``The extent to which this was a political decision by a political branch of government that was urged on the Fed is very important to me -- that that not happen.''

The inquiries -- one by the Senate Finance Committee of which Grassley is the ranking Republican and the other by the Senate Banking Committee -- may herald a broader congressional backlash against the agreement, which Senate Majority Leader Harry Reid of Nevada has described as a ``bailout.''

(snip)

``Americans are being asked to back a brand new kind of transaction, to the tune of tens of billions of dollars,'' Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said yesterday in a statement. ``With jurisdiction over federal debt, it's the Finance Committee's responsibility to pin down just how the government decided to front $30 billion in taxpayer dollars'' for the deal, Baucus said.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a.Rf0elSyTtI&refer=home

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I'm holding out just a little bit of hope that congress will intervene and put an end to this moral hazard.

[JTFrog]

1. State sanctioned takeover. How communist of them. n/t

[Doctor_J]

6. It's a time-honored US tradition to nationalize the sick companies and

privatize the healthy ones. Selective Communism, in a manner of speaking

[Supersedeas]

10. govt interference with private contracts -- conservative? laissez-faire??

[madrchsod]

2. we will see if the cowards can get some backbone

or are they just pissing into the wind

[acmavm]

3. My advice is to wear water-proof clothing.

[DeepModem Mom]

4. K&R

[Doctor_J]

5. Appears to me tha IA is turning blue.

Grassley has been taking some shots at BushCo lately. Sounds to me like the great state of IA is going to be BLUE this November. Dunno if Chuck has been hearing from his heartlanders, or if he looked at the caucus turnouts and read the tea leaves. either way works for me.

[Deny and Shred]

7. Don't hold your breath for an Iowa blue shift. Despite the high

farm quotient, which theoretically might push them Dem, Iowa has a deep steak that might be termed Libertarian. It goes back to Henry Wallace, and further.
I think Grassley may be realizing that these FED transactions are not indicative of HIS take on Republican party ideals. Even if he does come to the comclusion that the current administration engages in corporate welfare, I'd expect him to try to believe its possible to reform the Republicans before turning to the Dems.

[pacalo]

8. Hmm. I'm thinking it will take decades to reform the Republicans, if at all possible.

Lots of work for Grassley to do; so little time.

[progressoid]

9. Yep!

It's been a slow but steady change. But we still have a few serious pockets of red to get rid of!

Our Dem Governor won by about 8% last year replacing a two term Democratic Governor. In 2006, we gained two seats US House of Representatives, and Democrats won a majority in both houses of the Iowa General Assembly.

Iowa voters supported Bill Clinton in 92 and 96. Al Gore won the state in 2000, but * won the state in 2004. :grr: