Garrett Calls for Hearing on Feds Bailout of Bear Stearns

Letter

Garrett Calls for Hearing on Feds Bailout of Bear Stearns

Urges Financial Services Chairman to Examine Federal Reserves Authority

Today, US Representative Scott Garrett (NJ-5), a member of the House Financial Services Committee, strongly urged Chairman Barney Frank to hold a hearing in order to further examine the current actions taken by the Federal Reserve in the recent sale to JP Morgan. Ranking Member Spencer Bachus (AL-6) and other members of the Financial Services Committee signed Garrett's letter in support.

In response Garrett stated:

"I believe it is critical that Congress carefully examine the Federal Reserve's intervention in the bailout of Bear Stearns. Our nation's hardworking taxpayers, who will be expected to foot the bill for these costs, deserve a thorough analysis of the steps the Fed took and the reasoning behind their decisions."

A copy of the letter is below:

The Honorable Barney Frank

Chairman

Committee on Financial Services

2129 Rayburn House Office Building

Washington, DC 20515

Dear Chairman Frank:

We are writing to respectfully request you hold a hearing of the full Financial Services Committee regarding the recent collapse of the investment bank Bear Stearns and the subsequent actions taken by the Federal Reserve to facilitate Bear Stearns' sale to J.P. Morgan Chase. These steps have had an immediate impact on the financial markets and are also expected to have a long-term effect on our financial regulatory structure.

For the first time since the Great Depression, the Fed voted to open its discount window to primary dealers. While this authority has been available to the Fed since 1932, the decision to use it at this time has raised questions about whether and when the Fed should intervene to help a particular industry or firm in the name of market stability.

With the Fed approving the financing arrangements of the sale of Bear Stearns to J.P. Morgan Chase as well as guaranteeing $29 billion in securities currently held by Bear Stearns, the Fed has possibly exposed the American taxpayers to unknown amounts of financial loss and established a precedent that could lead to future instances of companies in similar financial trouble expecting the same assistance.

These extraordinary actions have raised a number of complex and multifaceted questions. As members of the committee of jurisdiction over our nations' financial markets and the regulatory bodies that oversee them, we feel it is imperative to have a full and public vetting of this unique situation. Therefore, we strongly urge you to convene a hearing on this subject of the Financial Services Committee on the soonest possible date.

Thank you for your consideration of this request.

Sincerely,

Scott Garrett

Member of Congress

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