Wall Street Takes the Moral Low Ground « The Washington Independent

Well, there’s a fine way to thank the U.S. government for its trouble: Bloomberg reports that investment banks may be packaging high-risk corporate loans into securities to use as collateral for borrowing from the Federal Reserve.

You might recall that the Federal Reserve last month opened its discount window for borrowing money at cheap rates to non-banks for the first time since the Great Depression. It was a radical step, aimed at easing the credit crunch and unlocking the markets.

So in the midst of a debate over whether greedy and irresponsible homebuyers should get a hand from the government, Wall Street firms seem to be bundling together a bunch of financial junk and shoving it on the Fed, in return for the government’s gracious extension of credit.

That should put a different spin on the moral hazard aspect of this whole housing mess.