HM, I AGREE WITH A WSJ EDITORIAL

Well, large parts of it anyway.

REVIEW & OUTLOOK
Bear Naked Lenders
March 18, 2008; Page A22

(excerpts)

The hard capitalist truth is that Bear's most senior managers have mainly themselves to blame. They bought their second or third homes with fabulous bonuses during the good times, and they must now endure the losses from Bear's errant investment bets. Bear took particular pride in its risk management, but it let its standards slide in the hunt for higher returns during the mortgage mania earlier this decade.

The Fed is also opening its discount window even further to non-deposit-taking institutions, and for an open-ended amount of lending and mortgage-based collateral. We endorsed this last week as a way of reviving a frozen market in mortgage-related securities. But with its Sunday move, the Fed is going all in. This raises genuine issues of moral hazard. Commercial banks traditionally have access to the discount window -- that is, to public money -- because they are regulated and have certain reporting and capital obligations.

Will investment banks and securities dealers now have to meet similar obligations if they tap the window? If they don't, then it's unfair to the banks that do, not to mention the taxpayers who are lending them the money. Goldman Sachs or Lehman may not want to meet those terms, but they should be asked to do so.