Federal Reserve loans banks $200 million. Dean Baker wonders why.

[cyrano]

Why wouldn’t we want the banks to be forced to come clean and eat their losses? This is always the policy that the economists advocate when the parties in question are not the big New York banks. Does anyone remember the East Asian financial crisis when the media was full of condemnations of crony capitalism and the IMF insisted imposed stringent conditions on South Korea, Thailand, and Indonesia as a condition of getting bailed out? At that time, everyone insisted on transparency. Aren’t there any economists who still have this perspective? If so, why aren’t their views appearing anywhere in the news?

Comments

[evilmagnus]

It's all in the words.

So long as they can say it's done by the 'Term Auction Facility', even if the loans are constantly re-up'd and they accept utter crap for collateral that no-one else will touch, it's just a temporary loan! It's not like the Fed is buying stakes in US banks to give them cash to keep them from going under, and it's certainly not what happened in Japan!

So it's all good.