Who is Regulating the Federal Reserve?

Treasury Swap Auctions have begun where the U.S. treasury department has agreed to buy (or trade) highly liquid T-Bills for Mortgage Backed Securities from "Primary Dealers". What has been hailed as the economic move of the millenium that saved the country from the 2nd Great Depression is legally questionable? Bernanke's extension of U.S. backed credit in exchange for "non-agency" AAA and Aaa rated Mortgage Backed Securities has greatly extended the government's role in America's free market. It is shocking that the news headline of the day was that JPMorgan and the Federal Reserved bailed out Bear Stearns, when a massive political action was truly in progress. In times of crisis we seem to be blinded by our patriotism, and often open doors that should not be opened. The Fed has seriously violated its seemingly Laissez-faire economic policy and set in stone its monetarist fundamental as the economic auctioneer (i.e. lender of last resort).