The government’s financial regulatory institutions are making the rules as they go along. Following the Bear Stearns bailout, the Federal Reserve made the unprecedented move of setting aside $30 billion to lend to investment banks.

Treasury Secretary Henry Paulson conceded yesterday that if securities firms were going to start getting so much money from the Fed, perhaps the Fed should start monitoring their activities. The Wall Street Journal’s Damian Paletta writes that, “His salvo is the latest example of how the housing and financial crisis has shredded regulatory and corporate boundaries that for years directed the government’s role in financial markets.”  Read Paletta here.   MB

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