FDIC Criticizes Fed Handling of Bear Stearns: Says Banks Need Expanded Supervision

We think they need ADULT supervision.

But why quibble when its obvious that the Fed can provide BILLIONS in free money to investment speculators at NO COST to the public! They keep what they win, and if they lose the Fed takes it at no cost to anyone.

Isn't this what they have claimed? Marvelous!

We hear Wall Street calls this 'special facility' The Magic Dragon.

Investment banks need expanded supervision: FDIC
Wednesday June 18, 12:53 pm ET

WASHINGTON (Reuters) - Any troubled U.S. investment bank headed toward bankruptcy should be subject to supervisory intervention just like commercial banks, the head of the Federal Deposit Insurance Corporation said on Wednesday.

Renewing her call to expand regulation of investment banks after the collapse of Bear Stearns, FDIC Chairman Sheila Bair said a receivership and resolution plan should be created to maintain order in the markets and minimize losses for all parties involved.

"The government cannot be put in the position of having to simply write a blank check when these institutions get into trouble," Bair said in prepared remarks to be delivered before a group of financial professionals. (No matter how you wish to spin it, this is what was done under the leadership of the Bernanke Fed, and it was probably the worst policy decision of his chairmanship thus far - Jesse)

Bair was referring to the move taken earlier this year by the U.S. Federal Reserve to provide discount window liquidity and a credit guarantee of $29 billion to Bear Stearns, which is being acquired by JPMorgan Chase (NYSE:JPM - News).