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War deficit passed on to next
generation
Mission accomplished!
The Iraq war is the only U.S. war
not financed directly by a U.S. administration. The Vietnam war was paid
for by President Johnson's war tax; and, when the war ended, it left no debt.
While Bush provided lower corporate taxes, he left U.S. taxpayers holding
the largest budget deficit in history for future taxpayers to pay down.
Fed Chairman Ben
Benanke
Ready to bail out mortgage executives?
The Federal Reserve Chairman
gave his strongest advice to date to Freddie Mac and Fannie Mae yesterday
to cut the size of their portfolio’s. They have such a commanding portion
of the secondary mortgage market that missteps by the quasi public private
companies could pose risks to the economy.
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Both of the mortgage giants have
cut their exposure to the subprime loans with Freddie Mac saying they will
no longer purchase them. Bernanke thinks that the companies should not be
as active in the general mortgage market and focus on mortgages that serve
a public purpose.
Bernanke has previously supported
efforts to pare the two mortgage companies’ huge portfolios. This time
he was a bit more specific and recommended that their holdings might be linked
to a “measurable public purpose, such as the promotion of affordable
housing.”
The Fed chief’s suggestion was
contained in remarks delivered via satellite to a bankers meeting in Hawaii.
His remarks come as worries about
risky mortgages are making investors jittery.
Fed Chairman Ben Bernanke is giving
a talk about financial stability at the Federal Deposit Insurance Corporation's
Forum on Mortgage Lending for Low and Moderate Income Households in Virginia.
The big headlines? New mortgage rules will be forthcoming from the Fed next
week ... and the PDCF lending facility may be extended. More in this excerpt
below ...
Benanke talks about stability at FDIC Forum on Mortgage Lending
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"We supplemented our actions
regarding Bear Stearns by establishing the Primary Dealer Credit Facility
(PDCF). Under the PDCF, the Fed stands ready to make fully collateralized
loans to the remaining four major investment banks plus other broker-dealers,
called primary dealers, that transact regularly with the Federal Reserve.
The Fed also created the Term Securities Lending Facility (TSLF), which allows
primary dealers to borrow Treasury securities using other types of assets
as collateral. These new facilities assured the secured creditors of primary
dealers that those firms had sufficient access to liquidity, reducing the
danger of runs like the one experienced by Bear Stearns. Although short-term
funding markets remain strained, they have improved somewhat since March,
reflecting the availability of several Fed lending facilities as well as
the ongoing efforts of financial firms to repair their balance sheets and
increase their liquidity.
"The PDCF and the TSLF were
created under the Federal Reserve's emergency lending powers, with the term
of the PDCF set for a period of at least six months, through mid-September.
The Federal Reserve is strongly committed to supporting the stability and
improved functioning of the financial system. We are currently monitoring
developments in financial markets closely and considering several options,
including extending the duration of our facilities for primary dealers beyond
year-end, should the current unusual and exigent circumstances continue to
prevail in dealer funding markets. At the same time, we are taking measures
that will serve over time to strengthen the primary dealers, other financial
institutions, and the overall financial system. As I will discuss, these
measures include working with the SEC and the primary dealers to increase
the firms' capital and liquidity buffers and cooperating with other regulators
and the private sector to help make the financial infrastructure more resilient."
Currently available U.S. hybrid electric
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