"Bernanke may be feeling some heat; Fed's actions on seminar agenda" by Associated Press | August 21, 2008
WASHINGTON - While intended to prevent a broader economic meltdown, the Fed's actions have drawn some criticism about whether taxpayers are being put at risk and if expanded safety nets will encourage financial companies to gamble more recklessly in the future.
The Fed's handling of the credit, financial, and housing debacles is likely to spur debate at a conference in Jackson Hole, Wyo. Sponsored by the Federal Reserve Bank of Kansas City, the conference opens today.
As financial companies racked up multibillion-dollar losses on soured mortgage investments, and credit problems spread globally, firms hoarded cash and clamped down on lending. That crimped consumer and business spending, dragging down the economy.
Some critics worry the Fed actions could put taxpayers on the hook for billions of dollars and create a "moral hazard," where financial companies might feel more inclined to take extra risks in the future because they believe the Fed will ultimately bail them out.
That's what happened, all right!
