In an unprecedented move to stave off bankruptcy for one of corporate America's most favored Presidential candidates, the Federal Reserve, after a mid-morning conference call with the head of the U.S. Treasury, several of the largest Wall Street institutional investors, and an unnamed hedge fund manager, announced today that the Fed's discount window will be opened to the Clinton Campaign. Recent rumors about the Clinton Campaign have highlighted underlying liquidity concerns, and there was concern in the financial community that this might cause her to drop out of the race.
Fed Chairman Ben Bernanke, in a short statement released after the conference call, had this to say:
This unprecedented move has several justifications. First, the Clinton campaign is just too big too fail. Clinton dropping out would adversely impact the profit margins of GE and Viacom, because viewership for many of their news channels would drop substantially. Second, a Clinton withdrawal would shake corporate confidence in the electoral process itself. The system lives on faith in the process: the corporations donate to both candidates of the major parties, and in the end, in November, they hold a winning ticket either way. A Clinton bankruptcy would undermine corporate confidence in ways that might cascade across all levels of government--local and State elections, not to mention House and Senate seats. The risk is just too great. And third, not only Wall Street would be hurt by a Clinton bankruptcy. This would also hurt Main Street, as Team Hillary owes money to small vendors, school districts, caterers, etc. These small business owners can't afford to see Hillary go down in a liquidity crunch.
Noted NY TIMES editorialist and economist Paul Krugman had an immediate response:
I applaud this bold and courageous move on the part of Chairman Bernanke. This is precisely the remedy that the Clinton campaign--and America--needed. However, this remedy is only the beginning. There is a profound market failure here, and it must be addressed. What is truly needed is substantive public investment in Team Hillary. Thousands, if not millions, of new jobs could be created--canvassers, organizers, phone bankers, fund raisers, etc. The negative externalities of an Obama candidacy--increased voter turnout, massive voter registration drives, an overflow of hope that the democratic process could be used to end an unpopular and unjust war--are too much for us, as a nation, to risk through inaction.
The Obama campaign was not available for comment.