Go to the happy place. Go to the happy place

So those clever bootses over at Lehman have taken a bunch of their toxic debt, shoveled it into a CLO, bought a few expensive lunches for the bond ratings guys to get an A rating for the tranche that won't default until 20% of the underlying debt fails, and then used it as collateral for a loan from the Fed.

That's our Fed. Yours and mine. The custodian of the government's money. Taking a reeking pile of investment grade Lehman garbage wrapped in a Moody's bow and passing out government money.

One person familiar with the matter said the vehicle was named Freedom because it was designed to give Lehman freedom to tap as much cash as possible if needed. The size of the borrowing from the Fed wasn't known, but the person said it wasn't "material" and was meant as a test of what the Fed would accept.

The loans in the pool included debt that was issued to finance last year's leveraged buyouts of First Data Corp. and TXU Corp., a person familiar with the matter said.

A number of Wall Street executives called Lehman's move "brilliant" and said they may follow suit. One senior finance executive at a rival of Lehman's said his main reservation with Lehman's move was that it might lead to criticism that Wall Street is taking its junk to the Fed for cash. Still, he noted that unlike many troubled mortgage securities, there is a discernible market for leveraged loans.

"It's a very creative way for investment banks to get liquidity from assets that they don't want to sell at fire-sale prices," said Todd Kesselman, managing director of Precision Capital, an investment-advisory firm that specializes in structured credit and private equity.

This, I suppose, represents the zenith of the Republican free-market ideology.