thku4grace

Warren Buffett Is Wrong on Fed Intervention in Bear Stearns

I agree that the bailout is economically unethical. Seeing stupid, reckless firms like Bear Stearns take the full blow would provide a strong incentive for other firms from using similar tactics in the future and reap benefits for the industry in the long term. Additionally, it would also apply some pain onto the economy which would be directed back at the Fed rightfully so, for not supervising the industry. Unfortunately, it had more to do with Greenspan's Fed. I believe the Fed and the additional pressure from Congress to act will lead to additional oversight and/or rule changes which the industry won't like but are richly deserved. I think the pain of mega-billion dollar losses experienced by these investment banks together with the expectant new oversight and future rule changes imposed are all we can expect and or desire in a free market economy. The prospect of actually allowing Bear Stearns to go BK may have a much stronger effect than desired for the entire industry and the whole economy. It would probably be overkill just to force change. Change that can be had for a lesser cost.