Treasury Department announced today that it is auctioning a total of $100 billion in bills to boost the Fed's liquidity programs. This is IN ADDITION to the $100 billion it announced yesterday. See the update.

Greenspan warns Bernanke and the US people not to use the magical piggy bank which is the Federal Reserve's ability to make up money out of thin air. Only Greenspan denies that the magical piggy bank is real. HAHAHA. He accidentally told the truth! The Federal Reserve can and will and does make money out of thin air.

Banks have dialed up the lending requirements in the face of the nearly half-trillion dollars lost in the mortgage mess to-date. The Federal Reserve reported that banks and lending institutions have tightened credit standards across all loan-types as losses mount and liquidity remains a key issue.

Thomas Montag just received $40 million to start work today as Merrill Lynch's new head of sales. Mr. Montag is clearly a brilliant salesman, having negotiated such a rich deal from Merrill.

In a speech delivered at the Boston Fed yesterday, Bernake hinted that he may be finished bailing out the US banking system, and would like to refocus on his actual job: preventing rampant inflation from destroying the US economy.

The Federal Reserve has approved the purchase of Countrywide by Bank of America. Not surprising really - at this point the Fed will probably approve the purchase of any bank by another just to save the public from “BANK FAILURE” headlines. While the acquisition is approved there has been some rumblings that Bank of America is not quite sure whether they’ll complete the transaction; but so far all signs and sounds coming from BofA point to moving forward.

In a speech delivered in San Francisco, Dallas Fed President Richard Fisher said the "I" word several times. Mr. Fisher said "If inflationary developments and, more important, inflation expectations continue to worsen, I would expect a change of course in monetary policy to occur sooner rather than later, even in the face of an anemic" economy.

The Fed has finally decided that they need to look at their policies regarding potential bubbles. Here is Fed Governor Frederic Mishkin in a recent speech:

Remarks by Dennis P. Lockhart, president and chief executive officer of the Federal Reserve Bank of Atlanta, delivered to the Southern Center for International Studies Young Professionals, May 17, 2008. Dennis Lockhart discusses the U.S. economy, inflation and the global economy.

There have been so many housing and mortgage proposals and counterproposals released in the past few weeks and yesterday's Wall Street Journal pretty much sums up the state of the housing and mortgage markets.

US Federal Reserve Chairman Ben Bernanke told a congressional hearing today that a recession, this year, in the United States is possible. He followed that statement by saying that he believes such a recession would be short in duration because of the actions by the fed.

Over the past few weeks, the Federal Reserve added to its alphabet soup of new facilities to deal with ongoing strains in financial markets. Taken together, these programs represent a clever gamble to provide large institutions some time to get their financial houses in order. Fed officials have effectively rewritten the rules on the role of a central bank in a market economy.