Why doesn't it seem right to you? Just like J.P. Morgan who before the Fed was created underwrote the panics ....the Fed is doing the same thing now. They've actually been astute...throwing money to a event at a time of panic generally yields greater than expected returns.
Maybe I'm misunderstanding your post...but the Fed has no desire to get "returns" for providing the liquidity. The Fed is there to keep the clock wound up...that's it.
No..the Fed expects to paid back for the money that they are lending. If they can get a return on that all the better.
Well, the Fed does expect to get paid back, but I have to disagree about the Fed looking for a return. The Fed has no incentive nor any goals of making a profit. I mean, if you think about it, it's an oxymoron to even think in terms of gains or losses for the Fed. Since the Fed controls the money supply, it would be quite easy for them to control the pricing of assets (which they do to create liquidity). So, there isn't really a concept of "returns" for the fed. There's only "matching".
This shows our entire banking system was bankrupt before the Fed stepped in and starting tossing money around.
Well now you've hit a salient point. One with which I agree...almost. Fed has every incentive to seek a return. It can't and won't lose money to it's member banks over the long term.
we're still in the smartist era: http://finance.yahoo.com/tech-ticker no one cares about the banks. No one cares about the fake financial crisis
If the Fed wouldn't have rescued Bear Stearns it would be absolute insanity out there right now. We are in uncharted territory. Another big bank will gone down. Shitigroup is in trouble when they have to pay the 9% yield on the $ the Chinese gov't loaned them.