One thing is certain. If taxpayers do not share in the potential profits from a bailout, someone else will. On Tuesday, the Federal Reserve announced that it was relaxing rules that require investors who take large stakes in banks to submit to longstanding regulations on transparency and managerial control. Private equity firms have pushed for the changes because they would like to become big investors in beaten-down banks but do not want to be regulated.
The emphasis was added by me. If removing regulation causes too many problems, solve that by removing some more regulation. To quote Karl Rove, "We create our own reality."
So while Bernanke is on Capitol Hill blackmailing Congress, he is adding to the chaos with even more deregulation.
It should be noted that Tuesday was the same day that Warren Buffet's private equity firm announced that it would be investing $5 Billion in Goldman Sachs, which became a bank only this week.