Federal Reverse Bank of Richmond President, Jeffrey Lacker, spoke out in London Thursday criticizing the Fed's recent rescue of Bear Sterns. In an interview before his speech, Mr. Lacker said that "before this recent episode, there [were] well-understood and well-articulated boundaries around when we would lend" -- to manage short-term interest rate, to help bank deadline with temporary shortages of cash, or to facilities the closure of a bank taken over by regulators. The innovative credit programs and other things we've done have gone beyond previously accepted boundaries. We'll be wrestling with the consequences."

Lacker also stated when asked if he approved of the Bear $29 million loan, "It was an excruciating choice. I wasn't close to all the data they had...so I'm not going to second-guess it." Lacker said because of the loan it is "going to be natural for firms to ask for what they view as similar accommodation." The Fed has already "gotten questions from firms saying, 'I'd like to take over this other firm. Can you help like you helped with Bear?'" Lacker declined to give specific firm names, but added, "We've turned them down" because it "wasn't appropriate".

Federal Reserve Bank of New York President, Timothy Geithner, who assisted in the Bear Sterns rescue, is to address the implications for the country's regulatory structure in a speech today.

You can read the entire article here (which includes a link to Lacker's entire speech):
http://www.moneyweb.co.za/mw/view/mw/en/page94?oid=209865&sn=Detail

Chandra