Alan Greenspan Was Incompetent And Ben Bernanke Only Knows Academics - Not Reality. Barron’s Economics Editor Gene Epstein looks at the Federal Reserve’s role in the housing crisis.

On December 20, 2007, the Federal Reserve will offer $20 billion in 35-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this Announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction Parameters

Offering Amount:	$20 billion
Term:	35-day loan
Bid Submission Date:	December 20, 2007
Opening Time:	10 a.m. EST
Closing Time:	1 p.m. EST
Notification Date:	December 21, 2007
Settlement Date:	December 27, 2007
Maturity Date:	January 31, 2008
Minimum Bid Amount (per bid):	$10 million
Bid Increment	$100,000
Maximum Bid Amount (per institution):	$2 billion (10% of Offering Amount)
Minimum Bid Rate:	4.15 percent
Incremental Bid Rate:	0.001 percent
Minimum Award:	$10,000
Maximum Award:	$2 billion (10% of Offering Amount)

Submission of Bids
Participants must submit bids by phone to their local Reserve Bank between the Opening Time and Closing Time on the Bid Submission Date.

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the Notification Date. Between 10:00 a.m. and noon EST on the Notification Date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 3:00 p.m. EST on the Notification Date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

2007 Monetary Policy Releases

The Federal Reserve proposes protections for high cost mortgage borrowers aimed at easing the mortgage crisis. Banks would be required to verify income and assets and to be more transparent about their own compensation for making the loan.

Bush Praises Subprime Mortgage Strategy

President Bush says it is “going to take a while to work through this mortgage bubble,” but that his administration does have a strategy for helping subprime borrowers refinance or restructure their mortgages.

Bush said in a speech on the economy that the Treasury Department has worked with mortgage servicers so borrowers don’t “get pinched as their interest rates reset”. He also noted that the Federal Housing Administration is helping to refinance subprime borrowers and could do more if Congress passes an FHA modernization bill. (The Senate just passed such a bill, which now has to be reconciled with the House version).

Former Federal Reserve Board Chairman Alan Greenspan has suggested that the federal government could provide cash assistance for distressed homeowners who can’t afford their mortgage payments.

Mr. Bush stressed in his speech that he is against bailouts for lenders, speculators, and people who bought a house they couldn’t afford. “But we can mitigate some of the issues, and I’m concerned about people who are credit worthy enough to live in their homes not being able to deal with these resets,” he said.

Credit Suisse Questions Washington Mutual Management

In a new research report, Credit Suisse calls into question the “credibility” of Washington Mutual’s management, citing what it calls “numerous upward revisions” to the thrift’s credit expectations on future writedowns.

“We are concerned by the deterioration of WaMu’s credit metrics and we do not believe WaMu is out of the woods,” writes analyst Moshe Orenbuch. (The nation’s largest thrift recently raised $3 billion in convertible preferred stock, offering a coupon of 7.75% on the notes).

Credit Suisse predicts that WaMu faces credit losses of nearly $5 billion in 2008, with an additional $3.55 billion of reserve additions. “We believe that (nonperforming assets) should increase to roughly $10 billion or 3% of total assets,” Mr. Orenbuch says. Credit Suisse has a “neutral” rating on the stock.

In trading Tuesday, WaMu’s share price fell to a new 52-week low of $14.11. Its high is $46.

On Today’s date in 1946, war broke out in Indochina as troops under Ho Chi Minh launched widespread attacks against the French.

On Today’s date in 1972, Apollo 17 splashed down in the Pacific, winding up the Apollo program of manned lunar landings.

On Today’s date in 1974, Nelson A. Rockefeller was sworn in as the 41st vice president of the United States.

On Today’s date in 1998, President Clinton was impeached by the Republican-controlled House for perjury and obstruction of justice (he was later acquitted by the Senate).

Today Rhythm-and-blues singer-musician Maurice White (Earth, Wind and Fire) is 66.

Today Actor Mike Lookinland, better known as Bobby Brady to you and I, is 47.

Today Actress Alyssa Milano is 35.

Today Actor Jake Gyllenhaal is 27.

Golden Goldman Sachs reports. Another record-breaking year for the world’s largest securities firm. Meanwhile, the European Central Bank injects billions into money markets and the US Federal Reserve considers new mortgage protections.