SOURCE: WALL STREET ON PARADE

There seems to be a growing amount of concern these days about another epic financial crash on Wall Street. That, in itself, is a concern. After all, we’ve had only two great crashes in the past 89 years: one from 1929 to 1933 and one from 2008 to 2009. Why is another crash on the tip of so many tongues today?

Last week JPMorgan Chase released a lengthy research report in which its analyst Marko Kolanovic suggested that in the event of another major Wall Street crisis, the Fed should not only have its emergency powers restored to buy up toxic debt with abandon from Wall Street but that the Fed might also have to buy up stocks – an unprecedented action for the U.S. central bank – or at least unprecedented as far as the public knows.

The outrage of that suggestion rests in the fact that the biggest Wall Street banks, including JPMorgan Chase, have been artificially boosting “market” demand for their stocks by spending hundreds of billions of dollars collectively to buy back their own bank stocks instead of using those funds to make loans to worthy businesses — the core purpose of a bank to help grow jobs and the economy. Now JPMorgan Chase suggests that the Fed should be the buyer of last resort when the market decides to reassess the real value of those bank shares.

Yesterday, as if on cue, the three masterminds of the unprecedented 2007 to 2010 Wall Street bailout that included the funneling of a secret $16.1 trillion in cumulative, almost zero interest rate loans to the miscreant banks of Wall Street and their foreign peers, had the temerity and hubris to whine in a New York Times OpEd that “Congress has taken away some of the tools that were crucial to us during the 2008 panic. It’s time to bring them back.”

Former Federal Reserve Chairman Ben Bernanke, former New York Fed Bank President/U.S. Treasury Secretary Tim Geithner, and former U.S. Treasury Secretary Hank Paulson – all up to their ears in the financial crisis bailout — also write the following in the OpEd:

“Although we and other financial regulators did not foresee the crisis, we moved aggressively to stop it. Acting in its traditional role as lender of last resort, the Federal Reserve provided massive quantities of short-term loans to financial institutions facing runs, while cutting interest rates nearly to zero.”

At the urging of Senator Bernie Sanders, an amendment was inserted into the Dodd-Frank financial reform legislation of 2010 which authorized the Government Accountability Office (GAO) to perform an audit of the Fed’s crisis lending programs. That report was released by the GAO in 2011. It completely disputes the assertion by Bernanke, Geithner and Paulson that the Fed was acting “in its traditional role as lender of last resort.” The report states the following:

“The scale and nature of this assistance amounted to an unprecedented expansion of the Federal Reserve System’s traditional role as lender-of-last-resort to depository institutions.”

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