September 22, 2008

 

RE:  Treasury Bailout and Financial Markets

 

There remain more questions than answers as Congress this week debates the largest bailout package in history.  One question asked of Federal Reserve Chairman Ben Bernanke over a year ago regarding the credit crisis was what would be the most beneficial tool to fight the credit meltdown?  His response, paraphrased, was to know the real value of the exotic debt instruments disseminated globally through the financial system.  The essence of the bailout proposal will attempt to address that problem as the Treasury purchases troubled assets from financial institutions in an effort to get to the root of the problem.