At the Senate Banking, Housing, and Urban Affairs Committee hearing on “Turmoil in U.S. Credit Markets: Examining the Recent Actions of Federal Financial Regulators,” Senator Jim Bunning (R-KY) says his first question is how big do you have to be to be too big to fail, and he does not like the idea of the Fed getting involved in the bailout of that company [Bear Stearns]. I want to hear from the witnesses, he says, why they thought it was necessary to stop the invisible hand of the market from delivering discipline. That, he says, is Socialism. (:38)

 

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Why did you bail out Bear Stearns? It was the resounding question heard over and over in the Senate Banking, Housing, and Urban Affairs Committee hearing on “Turmoil in U.S. Credit Markets: Examining the Recent Actions of Federal Financial Regulators.” Federal Reserve Chairman Ben Bernanke, SEC Chairman Christopher Cox, United States Treasury Under Secretary Robert Steel, and President of the Federal Reserve Bank of New York Timothy F. Geithner, all attempted to answer that question to Congress. (more…)