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Federal Reserve

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Newsweek

Since its birth, the United States has grappled with the problem of an over-mighty financial sector. With the exception of Alexander Hamilton, the Founders' vision was of a republic of self-reliant farmers and small-town tradesmen. The last thing they wanted was for New York to become the London of the New World—a mammon-worshiping metropolis in which financial capital and political capital were rolled into one. That was why there was such resistance to creating a central bank, and why—despite two attempts—we have no Bank of the United States to match the Bank of England. That was why populists railed against the adoption of the gold standard after the crash of 1873. That was why there was so much suspicion when the Federal Reserve System was created in 1913. That was why government regulation of Wall Street was so strict from the Depression until the 1970s.But now, barely a year after one of the worst crises in all financial history, we seem to have returned to the Gilded Age of t

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Zero Hedge

The last domino of the big three has fallen: Corus Bank has been seized by the OCC. The bank, with $7 billion in assets and deposits, will transfer $3 billion of its assets to MB Financial Bank and all of its deposits. How nice of the FDIC to stick taxpayers with $4 billion in "assets" and no deposits against them. "The FDIC will retain the remaining assets for later disposition. The FDIC plans to sell substantially all of the remaining assets of Corus Bank in the next 30 days in a private placement transaction." The cost to the FDIC, pulled straight out of the rose-colored kaleidoscope, will be $1.7 billion.

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Zero Hedge

Warning: Watch the below video without prior ingestion of Xanax, lithium and/or horse tranquilizers at your own risk. Grandma Janet sounds like an insane and/or senile bureaucrat who does not want to admit that she was one of the select cabal of monetary druids whose mistakes essentially destroyed the financial world a year ago... and their reaction to this destruction has made sure that the US economic system is now promptly heading either toward hyperdeflation or hyperinflation (likely both). Nonetheless, some interesting quotes: And, For The Win: "The Fed's analytical prowess is top notch, and our forecasting record is second to none. The FOMC is committed to price stability and has a solid track record in achieving it."

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Chris Martenson

Now that the Fed has declared that the recession has ended and green shoots are everywhere, the next obvious part of this journey will have to be the unwinding of the massive amounts of stimulus and thin-air money that has been injected into the system. Certainly after watching the risk-money out-chasing junker stocks well up off their lows, we can surmise that the speculative animal juices are flowing again and that the Fed might want to consider taking away the punchbowl. Instead, today the Fed bought another $18.8 billion net ($32.4 billion gross) in agency mortgage-backed securities, which represents the exchange of thin-air money for GSE MBS paper. So far, all that we know about is that the Fed is talking about how to take the punchbowl away but that bankers are warning the Fed to "go slow."

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Reuters

* Fed had said disclosure could hurt banks, economy * Different judge ruled for Bloomberg News in similar case NEW YORK, Sept 9 (Reuters) - Fox News Network LLC on Wednesday appealed a U.S. judge's decision not to force the U.S. Federal Reserve to reveal the names of participants in its emergency lending programs. The news network, part of Rupert Murdoch's News Corp. (NWSA.O) filed with the 2nd U.S. Circuit Court of Appeals seeking to over turn a July 30 ruling by U.S. District Judge Hellerstein that denied the network's Freedom of Information Act (FOIA) request of the U.S. central bank.

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American Banking News

The Federal Reserve was to play a major role in the Obama Administration’s proposed regulatory overhaul of the financial system, but Congress may stand in the way. Many Senators have lost confidence in the Federal Reserve and are now moving a different route for financial regulatory reform. A new piece of legislation taking shape in the Senate’s Banking Committee would give the Federal Reserve far less authority than the Obama administration had originally thought when it proposed the reforms that it had unveiled in June. Why the change? Senators from both sides of the aisle have lost confidence in the Fed in the wake of the worst financial crisis since the Great Depression, challenging every from the central bank’s lack of transparency to its ability to protect consumers.

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Bloomberg

It was commercial paper and the $3.6 trillion money market industry that traded the notes that came close to sinking the global economy -- not a breakdown in credit-default swaps or bank-to-bank lending. The bankers were focused on saving themselves, and commercial paper, as invisible as the air they breathed, never came up at the meetings, according to one of the two dozen executives invited to the New York Fed by its president, Timothy F. Geithner, 48, and Paulson. ‘Erosion of Trust’

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I**Q**ve Been Mugged

(Irony?) This blog is all about empowering consumers (whether you have been mugged or not) to protect their money and sensitive personal information. Last week, the Federal Reserve Board (FRB) issued a warning to consumers to be aware of: "... fraudulent solicitations that appear to be made with the approval or involvement of the Federal Reserve, Federal Reserve officials, or other U.S. government officials. These solicitations promise bogus financial services or large sums of money in exchange for either payment or personal information that can then be used to access a consumer's bank account."

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Economic Policy Journal

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found. This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too. "The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."...

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www.telegraph.co.uk

Although a number of countries, including China and Russia, have suggested replacing the dollar as the world's reserve currency, the UNCTAD report is the first time a major multinational institution has posited such a suggestion.

In essence, the report calls for a new Bretton Woods-style system of managed international exchange rates, meaning central banks would be forced to intervene and either support or push down their currencies depending on how the rest of the world economy is behaving.

The proposals would also imply that surplus nations such as China and Germany should stimulate their economies further in order to cut their own imbalances, rather than, as in the present system, deficit nations such as the UK and US having to take the main burden of readjustment.

 

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