Fed’s Latest Plan for Bailing Out Wall Street Banks: Let Them Overdraft their Accounts at the Fed

What the Fed is now doing has all the same earmarks as the actions it took in the early days of the last crisis.

By Pam Martens and Russ Martens of Wall Street on Parade.

Yesterday, following the announcement of another 1/4 point interest rate cut by the Federal Reserve’s Open Market Committee, Fed Chairman Jerome Powell held a press conference at 2:30 p.m. It proved to be an embarrassing and shameful example of New York City-centric business journalism.

Seven business journalists from leading business news outlets that cover Wall Street asked questions in the first 23 minutes of the press conference. Not one of these reporters asked about the liquidity crisis on Wall Street that has resulted in the Fed offering $690 billion a week to 23 Wall Street securities firms and one foreign bank as well as a newly launched “don’t call it QE4” operation by the Fed to buy up $60 billion a month in Treasury bills from Wall Street dealers.

The Fed began its repo loan interventions on September 17 of this year for the first time since the financial crisis. That crisis grew into the worst economic collapse in the U.S. since the Great Depression. What the Fed is now doing has all the same earmarks as the actions it took in the early days of the last crisis. (See our ongoing series of articles on the Fed’s actions and the liquidity stresses on Wall Street.) And yet, despite these frightening similarities, not one of the following reporters (in this order of asking questions within the first 23 minutes of the press conference) could summon the nerve to broach the subject: Michael McKee, Bloomberg TV; Heather Long, Washington Post; Jeanna Smialek, New York Times; Steve Liesman, CNBC; Nick Timiraos, Wall Street Journal; Edward Lawrence, Fox Business; and Brendan Greeley, Financial Times

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