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Bernanke suggested that more banks and financial firms are likely to need additional capital injections from the government, and that further guarantees of their debt could be necessary, in return for the federal government receiving further equity in the firms.
The Fed chairman also said that "removing troubled assets from institutions' balance sheets, as was initially proposed for the U.S. financial rescue plan," might also be needed to supplement any further investments in banks.
The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.
The Fed stepped into a rescue role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program. The central bank loans don’t have the oversight safeguards that Congress imposed upon the TARP.
Total Fed lending exceeded $2 trillion for the first time Nov. 6. It rose by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA.
Simultaneously, the yen will wimp out via Japanese banker collusion, re-powering the carry trade, thus driving the stock markets up for one final monster rally to complete the Big Sting Two.