Good! My call to Eshoo made a difference! Let's get more transparency and more accountability! No more free and easy money for the bankers!
Congress to probe Fed's role in Bear's buyout: report
Marketwatch - March 20, 2008 10:43 AM ET
NEW YORK (MarketWatch) -- Congress is starting to probe the Federal Reserve-backed agreement to sell Bear Stearns to J.P. Morgan Chase, examining the deal to see if it complied with regulations and trying to determine taxpayer exposure, The Wall Street Journal reported Thursday.
Rep. Henry Waxman, D-Calif., who heads the House Oversight and Government Reform Committee, wants to take a closer look at what the potential taxpayer exposure may be, the paper reported, citing an unnamed aide to the congressman.
"The dramatic and unprecedented actions over the weekend by the Federal Reserve and by the Treasury will be just the first of numerous private and public steps to preserve liquidity in the market and to facilitate rational actions to strengthen the economy," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, in a statement released to MarketWatch.
"These actions could either implicate or involve securities and tax laws, and I am working to determine whether and to what extent that is the case," Baucus said.
The Senate Finance Committee has also announced it will conduct its own investigation into the bailout.
The Fed agreed Sunday to provide financing for up to $30 billion of less-liquid assets held by Bear Stearns (BSC). Roughly $20 billion of that funding will back mortgage securities.
J.P. Morgan (JPM) will exchange 0.05473 of a share of common stock for one share of Bear Stearns. Both boards have approved the transaction, which values Bear Stearns at around $2 a share.
Waxman has made headlines recently for conducting high-profile probes into the disparity between pay and performance for executives of financial institutions.
On Thursday, Congressman Barney Frank, who is the head of the House Financial Services Committee, called on lawmakers Thursday morning to find new ways to stabilize the economy.
Frank suggested reforming the regulatory system currently in place, as well as reexamining what capital means in today's economy and monitoring auction rate securities and municipal bond markets more closely.
"Ultimately, Congress has a duty to respond appropriately to increasing bad news in the economy," Baucus said.