Should Bernanke Apologize for Saving the Market?

Senator Grassley of Iowa wonders whether the Bear deal has any "upside" for taxpayers.

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"Maybe Bernanke can go to Capitol Hill and also tell Grassley how he just saved the stock market," is how one miffed Wall Street pro reacted to news that Charles Grassley, the top-ranking Republican on the Senate Finance Committee, wants his staff to look into the Federal Reserve-backed acquisition of Bear Stearns by JPMorgan Chase. Grassley said last week that he wanted to make sure top executives didn't profit at the expense of shareholders.

But even more irksome to some was this query by Grassley: "Is there any upside for taxpayers in the Bear Stearns deal?" Well, a repeat of Black Monday—a real possibility if the Fed had done nothing and the Bear deal had never happened—would have meant a nearly $3 trillion loss in market value. Just a guess here, but that probably isn't good news for taxpayers—or anybody else. So what is behind Grassley's actions? A couple of possibilities:

1) With markets convulsing and the Fed dancing as fast as it can, this was Grassley's way of reminding all involved that Congress still matters and has a big role to play as the housing crisis continues. Plus, as one Washington observer put it, "If there are five guys on Capitol Hill willing to make an issue of this, Grassley is one of them."

2) To some people, it might look as if Washington is scrambling to help Wall Street with all sorts of largess courtesy of the Fed but pretty much ignoring homeowners. Grassley's statement is a reminder that Washington isn't cutting checks with no strings attached.