Friends of Mozilo Powers Activate

According to Bloomberg, the Federal Reserve is going to buy commercial paper at below market prices. And not 10 basis points either, the fed is going to buy commercial paper at 110 basis points below the market rates. Why? Really! WHY?

On October 10th GE's CFO Keith S. Sherin said GE Capital has been able to issue commercial paper without interruption. The Fed is distorting the commercial paper market and will drive out real risk sensitive investors. Maybe the investors are pricing commercial paper appropriately - more likely than the Fed. This entire boondoggle looks like a big power grab by the politicians and some payback for the "Friends of Mozilo" in my opinion.