Oh boy, this sound bad. First, notice what is on and not on the list? I would not have economists as bank examiners or supervisors. This is the Fed's culture writ large. Since the place is run by monetary economists, they assume that economists have insight into every conceivable problem. By contrast, if you look at a Wall Street firm, economists only do the sort of thing you'd expect that economists might have an advantage in doing....economic forecasts or in client facing roles where being a PhD economist might add cred. Notice the absence of folks like criminologists, accountants, and most important, former industry practioners. And the fact they want to build on the shambolic stress tests is truly alarming. That is telegraphiing that the Fed continues not to have its heart in being a regulator.
Bernanke, Summers and Geithner say that we can't let the giant banks fail, because - without them - the economy will be starved of credit and we will be plunged into a depression. This isn't true. Says Who? If we really needed the giant banks, the following top economists and financial experts wouldn't have said that the economy can only recover if the insolvent "too big to fails" are broken up:
The officials' defiance, voiced before the Senate Banking Committee, came despite a stern warning from Treasury Secretary Timothy Geithner Friday about the need for administration officials to line up behind White House priorities. In expletive-laced remarks at a private meeting, Geithner urged regulators to end turf battles and support President Barack Obama's plan, said a person familiar with the matter. But Senator Richard Shelby, the committee's top Republican, said he hoped the regulators would not be swayed by Geithner's "tirade ... Your honesty and your candor are very important." FDIC Chairman Sheila Bair said her agency supports a merger of OCC and OTS, but resisted more centralization of bank oversight. "There is a profound risk of regulatory capture if you collapse it all into one agency," Bair said. John Dugan, comptroller of the currency, warned lawmakers the existing plan would wrongly give the Fed the right to 'override'
75% of Americans and at least 276 Congress members and 19 Senators want to audit the Fed, but the Fed is fighting tooth and nail to keep everything hidden. Most people assume that the Fed wants to keep secret the list of banks which received bailout money. You know, something along the lines of "we gave Goldman Sachs $100 billion". But what the Fed is really struggling to keep hidden is the fact that the entire financial system is based on massive manipulation and fraud by the Fed and its primary dealers. Specifically, the Fed is desperately trying to hide that many trillions of the government's bailouts have gone to inflating the stock market, buying up the U.S. government's own treasuries, and gaming the currency and gold markets.
Friday's blow up by Treasury Secretary Geithner may have been directed to a large degree at FDIC Chairman Sheila Bair. She is against the Federal Reserve gaining more power, and Geithner and Bair have history. WSJ is running the below excerpt today from WSJ economics editor David Wessel's new book, In Fed We Trust. Note Geithner's forceful attempt to push Wachovia into the hands of Citi, which would have been a gift similar to the gifts of Bear Stearns and Washington Mutual delivered to JPMorgan Chase. It should be noted that former Goldman CEO, Robert Rubin, played an important roles at Citi, including for a short-term Chairman--which would explain the desire to help out Citi. Geithner really wanted to give Citi, Wachovia compared to the multi-billion bid from Wells Fargo. Keep in mind while you read the excerpt that the initial deal with Citi was for $1 per share of Wachovia stock, Wachovia ultimately accepted an offer to merge with Wells Fargo for $7 per share.
And only Ron Paul makes the case for the people! AUDIT AND END THE FED! Bank regulators on Tuesday clashed over the future of regulatory reform efforts, continuing to reveal a growing rift between regulators that support a White House proposal that would empower The Federal Reserve and those that don't. "If you have a single monopoly regulator [The Fed], it leads to regulatory laxities," said Federal Deposit Insurance Corp. Chairwoman Sheila Bair at a Senate Banking Committee hearing on how bank regulation should change in response to the financial crisis. At issue is whether to imbue the Fed with the authority for overseeing systemically risky institutions, as the White House and Treasury Department are seeking, or to give that responsibility to a council of regulators, made up of the Fed and other bank and securities agencies, as Bair and some other regulators are seeking.
Half dozen economists who are very concerned about Federal Reserve independence what they thought about Rep. Ron Paul’s bill to audit the Fed.
This was my specific question: “Given that Congress can already grill
the Fed chairman during Humphrey-Hawkins (and occasional other
congressional appearances), how would a GAO really threaten Fed independence in practical terms?”
The GAO audit proposal is from Ron Paul, who has advocated abolishing the Fed and returning to the gold standard. Maybe people think that this is his foot in the door, a first step in the plan. When King Louis 16 called for a meeting of the Estates General in France, it led to a chain of events that resulted in his beheading! [how is this on subject ED]
My view is that there is a major difference between general economic questions from Congress to a Fed that isn’t open to a GAO audit and that doesn’t get its budget from Congress, versus a detailed audit b
Congressman Ron Paul's bill may never pass, but history suggests the US economy would be better off without the Federal Reserve Since it was introduced in February, Representative Ron Paul's "Audit the Fed" bill (H.R. 1207) has gained 282 congressional cosponsors. If adopted, the bill would allow the Government Accountability Office to review, not only the Federal Reserve's balance sheet, but its recent monetary policy deliberations and transactions. Fed Chairman Ben Bernanke opposes the plan, saying it would undermine the Fed's hallowed independence. But Mr. Paul, a noted libertarian who ran for president last year, also wants to keep the Fed out of Congress's clutches – by scrapping it altogether. That's the goal of his follow-up Federal Reserve Board Abolition Act (H.R. 833). Although that measure has yet to gain a single cosponsor, it has plenty of grass-roots support, and Paul hopes that members of Congress will jump on the bandwagon once t
Ron Paul's HR 1207 has 278 House co-sponsors. A House Bill only needs 218 votes to pass a House vote. How come Barney Frank will not let HR 1207 out of the House Financial Services Committee, of which he is the Chairperson, and go before a vote of the whole House of Representatives? I would like to point out that, for those who do not know, the Fed has hired a full staff of lobbyists, headed by Linda Robertson, who was the chief lobbyist for Enron. I find incredible irony in this move, given that Enron turned out to be one big fraud. Is the Federal Reserve one big fraud? There's no question whatsoever the Fed is spending millions on lobbying and public relations in order to try and squash the movement for an audit of the Fed.
Investment banks, of all things, are making serious money again, thanks in part to government aid. Ironically, they are benefiting from the crisis they helped to create. As profits go up, so do salaries -- only this time, it's the taxpayers who are shouldering the risks
The Constitution didn't intend it to be autonomous. In a recent opinion piece on the Federal Reserve for the Wall Street Journal, authors R. Glenn Hubbard, Hal Scott and John Thornton argued that the "Fed must above all maintain its political independence in conducting monetary policy." What the authors missed is that the Fed has never been non-political or independent, nor was it intended to be autonomous. The Fed is not an independent body free of political coercion, but rather an institution whose actions have long been dictated by the president and politicians in power. More important, since Congress is empowered through the Constitution "To coin Money, regulate the Value thereof," it's folly for general defenders of central bank independence to presume that this applies to our own Federal Reserve
Remember also the Fed is paying lenders not to loan! http://www.youtube.com/watch?v=Gkf8VG3HL_8 Sophisticated people have a hard time understanding popular outrage about the banking bailout. Indeed, the TARP watchdog Neil Barofsky's complaints that most TARP dollars were used to increase capital cushions and pay bonuses rather than increase lending strikes many as a silly complaint. Of course banks needed to recapitalize themselves before they could start lending, the sophisticates say. In fact, some people insist on claiming that the purpose was always a recapitalization of the banks. That might be true. But it certainly was not what the American people were told over and over again. They were told, unequivocally, that the bailout would increase lending. When he first explained that the TARP would be used for capital injections, then Treasury Secretary Hank Paulson said the purpose of the program was to get banks to “deploy, not hoard, their capital.”
So much for the ongoing secrecy of the nation’s independent central banking system. A new Rasmussen Reports national telephone survey finds that 75% of Americans favor auditing the Federal Reserve and making the results available to the public.
Just nine percent
(9%) of adults think that’s a bad idea and oppose it. Fifteen
percent (15%) aren’t sure.
Over half the members of the House now support a bill giving the Government Accounting Office, Congress’ investigative agency, the authorization to audit the books of the Federal Reserve Board.
Support for the bill has grown now that the Obama administration is proposing to give the Fed greater economic regulatory powers. The Fed which sets U.S. monetary policy was created as an independent agency to keep it free of politically-motivated
Enjoy Ben's greatest hits.
Wonder why I seem so angry, see this from Nassim Taleb: "Why are we letting the bus driver who drove us off the cliff, drive the new bus?" Taleb also said Chairman Bernanke should be removed from office.
Economist Anna Schwartz says President Obama shouldn’t reappoint Ben Bernanke as Federal Reserve Chairman. Bernanke has mishandled the financial crisis, argues Schwartz, who co-authored seminal works with Nobel laureate Milton Friedman. “I am certain that there are economists whose reputations for outstanding academic work in monetary policy are every bit as distinguished as Mr. Bernanke’s, and who have good judgment and experience within the Federal Reserve System,” she writes in The New York Times. “President Obama should choose one of them.” Schwartz faults Bernanke for the Fed’s massive easing program.
The big bankers know that their banks would be insolvent without Federal Reserve bailouts, Treasury Department bailouts, and smoke-and-mirrors accounting.
The FDIC closed five more banks on Friday, and that brings the total FDIC bank failures to 69 in 2009. The following graph shows bank failures by week in 2009.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $15 million. ... First BankAmericano is the 68th FDIC-insured institution to fail in the nation this year, and the second in New Jersey.
Which is why Paul's most recent legislative accomplishment is so impressive. He has rallied the majority of the House to support his new cause: an audit of the Federal Reserve. Legislators are sick of not knowing what's going on inside Bernanke's fortress, especially as the Fed becomes further enmeshed in the nation's fiscal policy. Paul's little bill has become emblematic of a larger movement, one that could spell trouble for Obama's troubled regulatory plan. Ron Paul—always an enemy of regulation—is now an enemy of Obama. And a mighty powerful one at that.
And speaking of the Fed's balance sheet (and not the public side but the $9 trillion in off-balance sheet voodoo), here is some good reading, especially with certain politicians hell bent to prevent HR1207 from occurring...
It appears to be that traders in the FX market (who by the way tend to be smarter than the average equity or bond trader) have deduced that the entire "improvement" in 2Q GDP came from government spending.
Just when you thought the bond bubble was being saved for another day… The government managed to auction $39 billion worth of 5-year debt yesterday… barely. Wednesday’s debt sale drew a bid-to-cover ratio of 1.92, the lowest investor demand since September 2008. Low demand forced Uncle Sam to jack up interest rates at the last minute in two separate bond auctions this week — yesterday’s sale and Tuesday’s $42 billion auction of 2-year notes. So what’s an indebted government to do? Manipulate the market, of course.
That’s right, the biggest holder of US government debt is the United States itself. The Federal Reserve system of banks and other US intragovernmental holdings account for a stunning $4.806 trillion in US Treasury debt.
Treasuries rose $4.289 billion, not much better than last week. With massive supply of T-bills coming down the pipe, this doesn’t provide much support.
Conclusion: The Fed has no workable exit strategy. The US is about to enter a period of stag(hyper)inflation worst then anything experienced in over a hundred years. This article will help you understand the dire predicament we are in even the comments are informative make sure to scroll through them.
There's some fear out there that one of the big "shoes to drop" could be dropping -- namely our massive debt and the potential unwillingness of our trading partners to keep financing it. This week saw a series of monster bond sales--so many, in fact that buyers may be getting a stomachache.
Considering all the complications and hazards facing both him and the
economy he sees as his fragile charge, the real question the citizens
in Kansas City should have asked was: Chairman Bernanke, why don't you
just get out while the getting's good?
The calls to audit the Federal Reserve have come fast and furious in the last few weeks. Fed Chairman Ben Bernanke is continuing to push back against a House bill that would give the Comptroller General - the head of the Government Accountability Office - the power to audit the central bank. But, judging by the results of a new survey, the vast majority of Americans already support a Fed audit. 75 percent of Americans back auditing the Federal Reserve, according to Rassmussen Reports....
Another outstanding clip from Morning Meeting. Dylan Ratigan and Congressman Dr. Ron Paul discuss the Federal Reserve and Paul's bid (HR 1207) to pass legislation that would grant the GAO permission for a complete Fed audit.