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Former Federal Reserve Chairman Paul Volcker was deeply critical (in fed-speak terms) of the Fed's intervention in the Bear Stearns matter in a speech today, as reported by Bloomberg. (ht Calculated Risk)
"The Federal Reserve has judged it necessary to take actions that extend to the very edge of its lawful and implied powers, transcending in the process certain long-embedded central banking principles and practices."
"What appears to be in substance a direct transfer of mortgage and mortgage-backed securities of questionable pedigree from an investment bank to the Federal Reserve seems to test the time-honored central bank mantra in time of crisis: lend freely at high rates against good collateral; test it to the point of no return.''