September 23, 2008 (LPAC)--Ben Bernanke's lawyers should be working overtime, given the Fed's latest reinterpretation of U.S. law. In a document released yesterday, the Fed concluded that pirate equity funds and other "investors" should be able to buy up to a one-third interest in a U.S. commercial bank or bank holding company, without falling under the jurisdiction of the Bank Holding Company Act of 1956. The Fed has also decided to let Goldman Sachs and Morgan Stanley become bank holding companies, by converting their industrial loan companies into state-chartered banks in Utah.

We know why Helicopter Ben is doing this: The banks are bankrupt and in desperate need of huge amounts of capital, which the hot money pirates would be happy to supply, as long as they do not have to submit themselves to the regulatory scrutiny that becoming a bank holding company would require. We can't say for sure that the Fed's action is illegal, but it certainly violates the intent of the 1956 law, and it violates the interpretation of that law that has applied from its passage to the present banking crisis. Perhaps Benny's helicopter hat got so revved up that it flew away, taking part of his brain with it. Meanwhile, we'll let his lawyers check to see if Benny has committed yet another crime.

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