Time For Sheila To Pay A Visit To Ben?

Let's say I've got me a bank, and I decide to leverage up 43-to-1 on residential mortgages of uncertain quality. Let's also say I've decided to diversify, and have me a printing press in the garage out back, churning out perfect $100 bills every day.

Betcha' Sheila Bair's crew from FDIC will pay me a visit some Friday afternoon, and tell me to hand over the keys and go home, 'cuz my bank has been seized by the guv'mint.  And, by the way call my lawyer, 'cuz I'll be needing him.

Jesse Felder points out that this is what the Fed has done, by purchasing nearly a trillion dollars of mortgaged-back securities, bought with freshly minted money.

Hmm...

Here's his chart, just for grins.