As I’ve mentioned before – oppose the Federal Reserve and you should expect all kinds of opposition – from politicians, financial leaders, mainstream media – and apparently a host of economists. The letter below in the Wall St. Journal is a great example.
Many people now understand the dangers posed by the Fed. The following comments were posted by readers of the WSJ after the ‘petition’ below appeared on the WSJ website.
Liberty_Mike wrote:
Let me list off a few of the organizations some of these buffoons represent, and then I may change the mind of the few people that look at this and even begin to take it a little bit seriously. Of the above organizations, I see Wells Fargo, Morgan Stanley, JP Morgan Chase, JP Morgan, and the Federal Reserve Bank of SF to name a few. Of course people from these organizations would want to keep the Federal Reserve’s activities secret. These are some of the banks and financial institutions that are in collusion with the Fed! How can anyone take a list of people who want to keep the Federal Reserve’s activities secret, when it is being represented by the organizations that benefit from the Fed’s secrecy??
HR 1207 wrote:
175 Signatures? Give me a break!
I received more signatures on my petition in support of HR 1207 to Audit the Fed in just one voting precinct.
Ryan - Middle Class wrote:
What does the Fed have to hide?
Indeed – what does the Fed have to hide? The Fed deceptively disguises its opposition to an audit by saying that it should remain ‘independent’ and that any intrusion by our government could have serious monetary consequences.
Again – according to the Constitution of the United States – who has legal authority to manage our monetary system? The United States Congress (and therefore, the people of the United States) – not a private cartel of international bankers.
If we cut through the rhetoric – the Federal Reserve is saying that the people of the United States have no right to audit the institution that controls their economy. Does this really make any sense? Of course not. The private bankers behind the Fed (the same bankers who control the world’s largest private banks - JP Morgan Chase, Citibank, Goldman Sachs, Morgan Stanley, etc.) are very deceptively attempting to put an end to any opposition.
As I’ve said many times – we are dealing with a group of very powerful, very intelligent people who exert immense control over the world. My personal belief is that they are going to cause a significant financial ‘event’ before we ever get a chance to audit the Fed. By ‘event’ – I mean something along the lines of a severe stock market crash – which will shift focus away from the cause of it all – the world’s central banking system.
I encourage you to research and support House Resolution 1207 introduced by Representative Ron Paul. The people of the United States have the right to know what the Federal Reserve is doing.
jg – July 15, 2009
________________________
July 15, 2009, 1:00 PM ET
Petition for Fed Independence
Wall St. Journal
By WSJ Staff
The following is a petition calling for a commitment to Fed independence:
Open Letter to Congress and the Executive Branch
Amidst the debate over systemic regulation, the independence of U.S. monetary policy is at risk. We urge Congress and the Executive Branch to reaffirm their support for and defend the independence of the Federal Reserve System as a foundation of U.S. economic stability. There are three specific risks that must be contained.
First, central bank independence has been shown to be essential for controlling inflation. Sooner or later, the Fed will have to scale back its current unprecedented monetary accommodation. When the Federal Reserve judges it time to begin tightening monetary conditions, it must be allowed to do so without interference. Second, lender of last resort decisions should not be politicized.
Finally, calls to alter the structure or personnel selection of the Federal Reserve System easily could backfire by raising inflation expectations and borrowing costs and dimming prospects for recovery. The democratic legitimacy of the Federal Reserve System is well established by its legal mandate and by the existing appointments process. Frequent communication with the public and testimony before Congress ensure Fed accountability.
If the Federal Reserve is given new responsibilities every effort must be made to avoid compromising its ability to manage monetary policy as it sees fit.
Ricardo Caballero MIT
Kenneth French Dartmouth College
Robert Hall Stanford
Anil Kashyap Chicago Booth
Pete Klenow Stanford
Frederic Mishkin Columbia
Thomas Sargent NYU
Michael Woodford Columbia
Andrew Abel Wharton School, University of Pennsylvania
Daron Acemoglu MIT
Michael Adler Columiba University
Yacine Ait-Sahalia Princeton University
Fernando Alvarez University of Chicago
Scott Anderson Wells Fargo & Co.
Cliff Asness Managing and Founding Principal, AQR Capital Management LLC
Paul Asquith Massachusetts Institute of Technology
David Backus NYU
Dean Baim Pepperdine University/UCLA
Ravi Bansal Duke University
David Bates University of Iowa
Andrew Bernard Dartmouth College
Richard Berner Morgan Stanley
George Borts Brown University
Scott Brown Raymond James & Associates
Markus K. Brunnermeier Princeton University
Ralph C. Bryant Brookings Institution
Michael Carey Calyon Securities (USA) Inc. Credit Agricole Group
Christopher Carroll Johns Hopkins University
Martin Cherkes Columbia University
Diego Comin Harvard University
Jernej Copic UCLA
Dora Costa UCLA
Steven Davis University of Chicago Booth School of Business
Angus Deaton Princeton University
Davide Debortoli University of California, San Diego
Eddie Dekel Northwestern University
Harold Demsetz UCLA
Scott Desposato University of California, San Diego
Douglas Diamond University of Chicago Booth School of Business
Peter Diamond MIT
Francis X. Diebold University of Pennsylvania
Avinash Dixit Princeton University
Matthias Doepke Northwestern University
Darrell Duffie Stanford
Pierre Collin Dufresne Columbia
Martin Eichenbaum Northwestern University
Andrea Eisfeldt Northwestern University Kellogg School of Management
Jeffrey Ely Northwestern University
Eduardo Engel Yale University
Eugene Fama University of Chicago Booth School of Business
Henry Farber Princeton University
Roger Farmer UCLA
Jon Faust Center for Financial Economics, Johns Hopkins U.
Michael Feroli J.P.Morgan
Wayne Ferson U.S.C.
Kristin Forbes MIT-Sloan School of Management
Mark Gertler New York Univiersity
Marc Giannoni Columbia University
Simon Gilchrist Boston University
Robert J. Gordon Northwestern University
Roger Gordon UCSD
David Greenlaw Morgan Stanley
Gene Grossman Princeton University
Steffen Habermalz Northwestern University
James Hamilton University of California, San Diego
Gary Hansen UCLA
Robert Hansen Tuck School, Dartmouth College
Gordon Hanson UC San Diego
Milton Harris University of Chicago Booth School of Business
Tarek Hassan University of Chicago Booth School of Business
Zhiguo He Chicago Booth
John Heaton University of Chicago
D. Lee Heavner Analysis Group, Inc.
Christian Hellwig UCLA
Gailen Hite Columbia Business School
Yael Hochberg Kellogg School of Management, Northwestern University
Stuart Hoffman PNC Financial Services Group
Bengt Holmstrom MIT
Bo Honore Princeton University
Peter Hooper Deutsche Bank
Takeo Hoshi University of California, San Diego
Christopher House University of Michigan
Peter Howitt Brown University
Chang-tai Hsieh University of Chicago
Ellen Hughes-Cromwick Chief Economist, Ford Motor Company
John Huizinga University of Chicago Booth School of Business
Erik Hurst University of Chicago Booth School of Business
Ravi Jagannathan Kellogg School of Management, Northwestern University
Dana Johnson Comerica Bank
Karen Johnson Federal Reserve Board of Governors (retired)
Charles I. Jones Stanford University, Graduate School of Business
Paul Joskow MIT
Matthew Kahn UCLA
Juno Kang The Bank of Korea
Steven Kaplan University of Chicago Booth School of Business
Bruce Kasman J.P. Morgan Chase
Peter Kenen Princeton Uniiversity
Ralph Koijen University of Chicago Booth School of Business
David Kotok Chariman, Central Banking Series, Global Interdependence Center, Philadelphia, PA.
Arvind Krishnamurthy Northwestern University
Rafael La Porta Dartmouth College
David Lake University of California, San Diego
Bruce Lehman UCSD
Nan Li Ohio State University
Hilarie Lieb Northwestern University
John Liew AQR Capital Management
Juhani Linnainmaa University of Chicago Booth School of Business
Andrew Lo MIT
Kevin Logan Dresdner Kleinwort
Guido Lorenzoni MIT
Hanno Lustig UCLA Anderson
Louis Maccini Johns Hopkins University
Burton Malkiel Princeton University
Eric Maskin The Institute for Advanced Study, Princeton University
Robert McDonald Kellogg School, Northwestern University
Daniel McFadden University of California, Berkeley
Doug McMillin Louisiana State University
Rajnish Mehra UC Santa Barbara
Robert Mellman J.P. Morgan
Robert Merton Harvard University
Laurence Meyer Macroeconomic Advisers, LLC
Atif Mian University of Chicago
Gregory Miller Suntrust Banks, Inc.
Robert Moffitt Johns Hopkins University
Stephen Morris Princeton University
Dale Mortensen Northwestern University
Giuseppe Moscarini Yale University
Tobias Moskowitz University of Chicago, Booth School of Business
Stefan Nagel Stanford
Maurice Obstfeld University of California, Berkeley
Lee Ohanian UCLA
Maureen O’Hara Cornell University
Stavros Panageas University of Chicago Booth School of Business
Dimitris Papanikolaou Northwestern University
Robert Parry President & CEO, Federal Reserve Bank of San Francisco, Retired
Lubos Pastor University of Chicago Booth School of Business
Lasse H. Pedersen NYU
Monika Piazzesi Stanford
Keith Poole University of California, San Diego
Giorgio Primiceri Northwestern University
Valerie Ramey University of California, San Diego
Enrichetta Ravina Columbia University
Esteban Rossi-Hansberg Princeton University
Michael Rothschild Princeton University
Tano Santos Columbia Business School
Ulrike Schaede University of California, San Diego
Richard Schmalensee MIT
Martin Schneider Stanford
Kermit Schoenholtz NYU Stern School of Business
Jay Shanken Emory
Robert Shiller Yale University
Hyun Shin Princeton University
Stephen Shore Johns Hopkins University
Costis Skiadas Northwestern University
Matthew Slaughter Dartmouth College
James F. Smith Kenan-Flagler Business School, UNC-Chapel Hill
Chester Spatt Carnegie Mellon University
James H. Stock Harvard
Rene Stulz The Ohio State University
Amir Sufi University of Chicago Booth School of Business
Joseph Swanson Northwestern University
Vefa Tarhan Loyola University Chicago
Edwin M. Truman Peterson Institute for International Economics
Harald Uhlig University of Chicago
Andrey Ukhov Northwestern University
Sergio Urzua Northwestern University
Chris Varvares Macroeconomic Advisers, LLC
Pietro Veronesi University of Chicago
Paul Wachtel New York University, Stern School of Business
Richard Walker Northwestern University
Mark Watson Princeton
Shang-jin Wei Columbia
David Weil Brown University
Pierre-Olivier Weill UCLA Economics
Burton Weisbrod Northwestern University
William Wheaton MIT
Michael Whinston Northwestern University
Mirko Wiederholt Northwestern University
Mark Witte Northwestern University
Tiemen Wouteren Johns Hopkins University
Jonathan Wright Johns Hopkins University
Wei Xiong Princeton University
Stanley Zin New York University
Showing posts with label Federal Reserve Audit. Show all posts
Showing posts with label Federal Reserve Audit. Show all posts
Saturday, September 16, 2006
Anti-Fed Activists Fuel Push for Audit
Since the owners of the Federal Reserve will not allow it to be abolished – I’m very curious to see how they are going to respond to this situation. My belief is that we’re going to see some type of serious economic ‘event’ (stock market crashes, U.S. dollar plunges, U.S. Treasury auctions fail, etc.) that will start the collapse of the world’s current monetary system. We’ll then see world political and financial leaders calling for a global monetary system (including a global reserve currency) to replace our current broken system.
This will re-focus the world on solving the crisis (a crisis created by the central bankers) – and shift the focus away from the actual cause of the crisis – the central banking system itself (including the Fed). This will happen long before Ron Paul (and others) ever has the chance to abolish the Fed.
This is how those in the shadows operate – lie, cheat and steal – deception, deception, deception. Create a problem (as they’ve done many times before) and then solve it in a way that moves the agenda forward.
I don’t have to tell you again where this is coming from. We are dealing with a very powerful spiritual enemy. I see him setting the stage for significant changes in the world. He is about to move in powerful ways.
Although our enemy is powerful – he is not as powerful as the One I serve. I continue to wait until I’m told to move.
The question you must ask yourself is – who do I serve? Do I want to get in the battle? Do I want to have true spiritual knowledge and wisdom? Ultimately – do I want to know my Creator and His plans for me?
Let go of your fear – and embrace the Truth.
jg – September 17, 2009
_______________________________________
SEPTEMBER 16, 2009
Anti-Fed Activists Fuel Push for Audit
By SUDEEP REDDY
Wall St. Journal
At the core of a congressional push to audit the Federal Reserve are activists with a larger purpose: to abolish the central bank.
Thousands of Americans are joining protests and lobbying their lawmakers in pursuit of the ultimate goal of replacing the Fed with a money system backed by gold or other commodities.
A movement to abolish the Fed was largely inspired by Rep. Ron Paul, left, addressing an audience about a health-care overhaul on Aug. 12, 2009.
Largely inspired by Rep. Ron Paul, the Texas Republican whose latest book, "End the Fed," will be released Wednesday, the movement draws its strength from people who want a sharp shift away from government dependency and toward a truly free-market economy.
Among the activists backing the cause is Isaiah Matos, the superintendent of a luxury high-rise building in New York City. Mr. Matos was an antiwar protester earlier this decade before he became a libertarian. Through neighborhood groups in Queens organized using Meetup.com, Mr. Matos met other Ron Paul backers who shared his distrust for the central bank and a currency backed only by a government's promise.
"I believe in a commodity-backed currency," said Mr. Matos, 30 years old. "In college, I didn't understand how we could move from gold to paper."
Mr. Paul's entrance into politics was driven by a similar concern. He decided to run for Congress in the early 1970s after President Richard Nixon ended the U.S. dollar's ties to gold. His long-term goal is a return to a commodity-backed dollar, allowing the currency to be redeemed for gold. Through his constant attacks on the central bank, Mr. Paul is drawing backers nationwide who also criticize the Fed for supporting Wall Street and bailing out financial institutions.
Mainstream economists generally credit the Fed for moderating economic cycles and mitigating the fallout from financial shocks. The central bank serves as the nation's lender of last resort, preventing runs on commercial banks by using its ability to create credit. The Fed influences interest rates as part of its mandate to balance inflation and unemployment. Mr. Paul and his followers say all of that should be left to market forces.
After last fall's election, Mr. Matos helped launch what became a series of rallies outside Fed buildings. The first came on Nov. 22 outside the New York Fed, with a crowd he estimated at 500 after picking up people in a march past Wall Street. He said twice as many people attended a larger rally in April, coordinated with protests outside other regional Fed banks nationwide.
By then Mr. Paul had introduced his legislation to audit the central bank, including its monetary-policy operations, which are now outside congressional scrutiny. To draw a wider base of followers, Mr. Matos's group changed the name of its rally from "End the Fed" to "Audit the Fed."
"End the Fed is a little too drastic for the mainstream," Mr. Matos said. "Sometimes it's not what you say. It's how you say it."
Mr. Matos joined other activists Tuesday in delivering petitions supporting the Fed audit to U.S. Senate offices in Washington and around the country. House lawmakers are planning to include an audit in legislation this fall, but the path in the Senate is unclear.
Fed officials say opening their monetary-policy deliberations to congressional review would cast doubt on their independence and ability to raise interest rates when necessary. That could stoke inflation, they say, raising borrowing costs for the government and consumers.
Mr. Paul's backers share the view that the Fed's ability to create money violates the intent of the Constitution. They say fiat currency, which isn't backed by commodities, threatens civilization by helping governments finance wars and laying the groundwork for financial crises. And they expect the vast expansion of the Fed's balance sheet during the financial crisis to spur rampant inflation down the road, even though central-bank officials say they can withdraw the money when needed.
"The Fed will self-destruct," Mr. Paul said in an interview. "This economy is going to get worse and this dollar is going to get a lot worse."
Campaign for Liberty, Mr. Paul's main political group, which claims 200,000 members, says auditing the Fed is its top legislative priority this year. The congressman calls an audit a "stepping stone" that would shed light on the central bank's operations and ultimately lead to a popular backlash. His audit effort has enlisted more than 300 House and Senate backers and a long list of groups, though few want to kill the Fed entirely.
Skip Cook, 63, a roofing salesman in Little Rock, Ark., said he has written to his local newspaper and his lawmakers "incessantly" to cajole his representatives into backing the audit legislation.
Mr. Cook, who spent a decade as a fixed-income broker, said the Fed's actions create long-term risks to the economy instead of preventing them. "What's it going to be like next time when they've put a couple trillion dollars of fiat money into this economy and the chickens come home to roost?" said Mr. Cook.
Abolishing the Fed may be a long-term goal, but Mr. Cook said more and more people are joining the cause. "The environment now because of the outrage is so ripe for people to entertain this information," he said. "Pain brings a lot of people into the auditorium."
Write to Sudeep Reddy at sudeep.reddy@wsj.com
This will re-focus the world on solving the crisis (a crisis created by the central bankers) – and shift the focus away from the actual cause of the crisis – the central banking system itself (including the Fed). This will happen long before Ron Paul (and others) ever has the chance to abolish the Fed.
This is how those in the shadows operate – lie, cheat and steal – deception, deception, deception. Create a problem (as they’ve done many times before) and then solve it in a way that moves the agenda forward.
I don’t have to tell you again where this is coming from. We are dealing with a very powerful spiritual enemy. I see him setting the stage for significant changes in the world. He is about to move in powerful ways.
Although our enemy is powerful – he is not as powerful as the One I serve. I continue to wait until I’m told to move.
The question you must ask yourself is – who do I serve? Do I want to get in the battle? Do I want to have true spiritual knowledge and wisdom? Ultimately – do I want to know my Creator and His plans for me?
Let go of your fear – and embrace the Truth.
jg – September 17, 2009
_______________________________________
SEPTEMBER 16, 2009
Anti-Fed Activists Fuel Push for Audit
By SUDEEP REDDY
Wall St. Journal
At the core of a congressional push to audit the Federal Reserve are activists with a larger purpose: to abolish the central bank.
Thousands of Americans are joining protests and lobbying their lawmakers in pursuit of the ultimate goal of replacing the Fed with a money system backed by gold or other commodities.
A movement to abolish the Fed was largely inspired by Rep. Ron Paul, left, addressing an audience about a health-care overhaul on Aug. 12, 2009.
Largely inspired by Rep. Ron Paul, the Texas Republican whose latest book, "End the Fed," will be released Wednesday, the movement draws its strength from people who want a sharp shift away from government dependency and toward a truly free-market economy.
Among the activists backing the cause is Isaiah Matos, the superintendent of a luxury high-rise building in New York City. Mr. Matos was an antiwar protester earlier this decade before he became a libertarian. Through neighborhood groups in Queens organized using Meetup.com, Mr. Matos met other Ron Paul backers who shared his distrust for the central bank and a currency backed only by a government's promise.
"I believe in a commodity-backed currency," said Mr. Matos, 30 years old. "In college, I didn't understand how we could move from gold to paper."
Mr. Paul's entrance into politics was driven by a similar concern. He decided to run for Congress in the early 1970s after President Richard Nixon ended the U.S. dollar's ties to gold. His long-term goal is a return to a commodity-backed dollar, allowing the currency to be redeemed for gold. Through his constant attacks on the central bank, Mr. Paul is drawing backers nationwide who also criticize the Fed for supporting Wall Street and bailing out financial institutions.
Mainstream economists generally credit the Fed for moderating economic cycles and mitigating the fallout from financial shocks. The central bank serves as the nation's lender of last resort, preventing runs on commercial banks by using its ability to create credit. The Fed influences interest rates as part of its mandate to balance inflation and unemployment. Mr. Paul and his followers say all of that should be left to market forces.
After last fall's election, Mr. Matos helped launch what became a series of rallies outside Fed buildings. The first came on Nov. 22 outside the New York Fed, with a crowd he estimated at 500 after picking up people in a march past Wall Street. He said twice as many people attended a larger rally in April, coordinated with protests outside other regional Fed banks nationwide.
By then Mr. Paul had introduced his legislation to audit the central bank, including its monetary-policy operations, which are now outside congressional scrutiny. To draw a wider base of followers, Mr. Matos's group changed the name of its rally from "End the Fed" to "Audit the Fed."
"End the Fed is a little too drastic for the mainstream," Mr. Matos said. "Sometimes it's not what you say. It's how you say it."
Mr. Matos joined other activists Tuesday in delivering petitions supporting the Fed audit to U.S. Senate offices in Washington and around the country. House lawmakers are planning to include an audit in legislation this fall, but the path in the Senate is unclear.
Fed officials say opening their monetary-policy deliberations to congressional review would cast doubt on their independence and ability to raise interest rates when necessary. That could stoke inflation, they say, raising borrowing costs for the government and consumers.
Mr. Paul's backers share the view that the Fed's ability to create money violates the intent of the Constitution. They say fiat currency, which isn't backed by commodities, threatens civilization by helping governments finance wars and laying the groundwork for financial crises. And they expect the vast expansion of the Fed's balance sheet during the financial crisis to spur rampant inflation down the road, even though central-bank officials say they can withdraw the money when needed.
"The Fed will self-destruct," Mr. Paul said in an interview. "This economy is going to get worse and this dollar is going to get a lot worse."
Campaign for Liberty, Mr. Paul's main political group, which claims 200,000 members, says auditing the Fed is its top legislative priority this year. The congressman calls an audit a "stepping stone" that would shed light on the central bank's operations and ultimately lead to a popular backlash. His audit effort has enlisted more than 300 House and Senate backers and a long list of groups, though few want to kill the Fed entirely.
Skip Cook, 63, a roofing salesman in Little Rock, Ark., said he has written to his local newspaper and his lawmakers "incessantly" to cajole his representatives into backing the audit legislation.
Mr. Cook, who spent a decade as a fixed-income broker, said the Fed's actions create long-term risks to the economy instead of preventing them. "What's it going to be like next time when they've put a couple trillion dollars of fiat money into this economy and the chickens come home to roost?" said Mr. Cook.
Abolishing the Fed may be a long-term goal, but Mr. Cook said more and more people are joining the cause. "The environment now because of the outrage is so ripe for people to entertain this information," he said. "Pain brings a lot of people into the auditorium."
Write to Sudeep Reddy at sudeep.reddy@wsj.com
Friday, September 15, 2006
Watt's the Deal?
I mentioned in an earlier post that there will be a battle for control of our monetary system (money). The blog post below by Karl Denninger is what I’m referring to – there will be some of our leaders who are honorable (Ron Paul) and will try to rest control from this international cartel of bankers. There will also be leaders who are not at all honorable – who will only look at what they can gain from the current system – and will fight for the bankers (Watt). It doesn’t matter to them if this destroys the United States. They can only see wealth, power and glory for themselves. They are most likely aware of the coming global government – and are attempting to solidify their place within it.
This is only the beginning. As our economy continues to decline – this will change from a battle over an audit of the Federal Reserve – to a battle for the system itself.
jg – November 18, 2009
_____________________________________
Wednesday, November 18. 2009
Posted by Karl Denninger in Federal Reserve at 08:05
Watt's The Deal?
As I noted on Blogtalk a couple of weeks ago, Representative Watt is doing his level best to derail the "Audit the Fed" bill and amendments introduced by Representatives Grayson and Paul.
Representative Watt's "alternative", however, doesn't open The Fed's books - it further snaps them shut! It not only leaves all the existing restrictions against an audit in place and refuses to mandate audits it also places four new restrictions on any such audit activity.
The most outrageous new restriction is that an audit, under Watt's proposal, may not examine the loans or liquidity arrangements that The Fed enters into or the impact of those deals on the reserves, balance sheet or financial condition of either a Fed-regulated bank or The Federal Reserve itself.
It isn't hard to figure out why Watt would want such blanket secrecy. One need only look at his heavily-gerrymandered district, which happens to contain the corporate headquarters of Bank of America.
This gives new meaning to "kneel before Zod."
The Dishonorable Representative Watt must resign - there have been ridiculous and outrageous claims made in the past, but any representation that his amendment would somehow "open the books of The Fed" is an outrageous lie, and further, it appears to be intentionally designed to protect one of the very "too big to fail" banks that likely has caused The Fed to get in trouble in the first place - Bank of America.
This is only the beginning. As our economy continues to decline – this will change from a battle over an audit of the Federal Reserve – to a battle for the system itself.
jg – November 18, 2009
_____________________________________
Wednesday, November 18. 2009
Posted by Karl Denninger in Federal Reserve at 08:05
Watt's The Deal?
As I noted on Blogtalk a couple of weeks ago, Representative Watt is doing his level best to derail the "Audit the Fed" bill and amendments introduced by Representatives Grayson and Paul.
Representative Watt's "alternative", however, doesn't open The Fed's books - it further snaps them shut! It not only leaves all the existing restrictions against an audit in place and refuses to mandate audits it also places four new restrictions on any such audit activity.
The most outrageous new restriction is that an audit, under Watt's proposal, may not examine the loans or liquidity arrangements that The Fed enters into or the impact of those deals on the reserves, balance sheet or financial condition of either a Fed-regulated bank or The Federal Reserve itself.
It isn't hard to figure out why Watt would want such blanket secrecy. One need only look at his heavily-gerrymandered district, which happens to contain the corporate headquarters of Bank of America.
This gives new meaning to "kneel before Zod."
The Dishonorable Representative Watt must resign - there have been ridiculous and outrageous claims made in the past, but any representation that his amendment would somehow "open the books of The Fed" is an outrageous lie, and further, it appears to be intentionally designed to protect one of the very "too big to fail" banks that likely has caused The Fed to get in trouble in the first place - Bank of America.
Americans Deserve a Transparent Fed
NOVEMBER 19, 2009
Americans Deserve a Transparent Fed
Wall St. Journal
Opinion
By RON PAUL AND JIM DEMINT
For nearly a century the Federal Reserve has operated in the shadows, away from the prying eyes of Congress, journalists and the American people. Created in 1913, the Fed was given enormous responsibility to protect the value of our currency. Yet in the last 96 years the U.S. dollar has lost more than 95% of its purchasing power. The Fed's unprecedented actions over the past year in attempting to stabilize the financial system have now forced it into the spotlight, and caused millions of people around the country to question the opacity of the Fed's financial transactions.
While the Fed is more transparent now than it was 20 or 30 years ago, there is still a long way to go. If the Fed were fully transparent, organizations such as Bloomberg and Fox News wouldn't have to sue its board of governors to receive materials that should be available through Freedom of Information Act requests. These include information on which banks and companies received loans and for what amounts after the 2008 financial meltdown.
One puzzling assertion made by the Fed and its supporters is that the Federal Reserve has some sort of independence from the government and independence in undertaking monetary policy. Nothing could be further from the truth. The Federal Reserve is a government-created banking monopoly, and its top decision makers are appointed by the president and confirmed by the Senate. If they do not perform satisfactorily in the eyes of politicians, they will not be renominated.
The Fed has also, for the past three decades, been required to engage in monetary policy with the goal of maintaining stable prices and full employment. Since the natural trend over time is for prices to decrease, a mandate to maintain stable prices is a mandate to pursue an expansionary monetary policy and inflate the money supply to counteract the lower prices we would expect from increased productivity.
The Fed chairman is required to appear twice a year before Congress to explain the Fed's actions, and how the Fed is complying with its mandates of stable prices and full employment. However, the idea that this constitutes any sort of oversight is laughable.
Each congressman who questions the chairman receives only a few minutes in which to ask questions and receive answers. Having been on the receiving end of Alan Greenspan's notoriously obtuse "Greenspan-Speak" answers and Ben Bernanke's similarly convoluted statements, we can assure you that the process is completely ineffective at getting any real answers.
No matter how direct the questions are, Fed chairmen answer with a vagueness common to bureaucrats. The whole process is window dressing for public consumption, not any sort of attempt to exercise oversight or gain any real insight into the Fed's actions.
What is needed is a full audit of the Fed, something that has never happened. We need to know who the Fed is giving money to, what types of securities are being purchased and what backs those securities, how much money is being paid for those securities, etc.
While Rep. Mel Watt's (D., N.C.) efforts to audit the new lending facilities authorized to bail out private firms such as AIG is a step in the right direction, it is still just a first step. These facilities have the same effect on the money supply as securities purchased through open market operations. Why should securities placed on one line of the Fed's balance sheet be subject to audit while the exact same securities placed elsewhere on the balance sheet are not subject to audit? The loopholes need to be closed.
In coming weeks we plan to offer companion amendments to legislation already before the House and Senate that will open the Fed up to a complete audit. The amendments set a six-month time lag on the publication of previously unreleased audit data to address the Fed's concerns that actions undertaken in support of monetary policy would immediately be politicized. The transcripts and minutes of the Federal Open Market Committee meetings would continue to be made public at the Fed's discretion, with unpublicized details of meetings not subject to any additional scrutiny. Finally, the amendments make clear that the purpose of the audits is not to interfere with or dictate monetary policy.
As strong opponents of government intervention into the economy, we do not want to see Congress directly dictate monetary policy. But while the Fed is involved so heavily in monetary policy and its actions so heavily influence the future of our economy, it is necessary that it be fully transparent. Interventions into the economy on the order of trillions of dollars cannot continue to escape public scrutiny. American taxpayers deserve better.
—Mr. Paul is a Republican congressman from Texas. Mr. DeMint is a Republican senator from South Carolina.
Americans Deserve a Transparent Fed
Wall St. Journal
Opinion
By RON PAUL AND JIM DEMINT
For nearly a century the Federal Reserve has operated in the shadows, away from the prying eyes of Congress, journalists and the American people. Created in 1913, the Fed was given enormous responsibility to protect the value of our currency. Yet in the last 96 years the U.S. dollar has lost more than 95% of its purchasing power. The Fed's unprecedented actions over the past year in attempting to stabilize the financial system have now forced it into the spotlight, and caused millions of people around the country to question the opacity of the Fed's financial transactions.
While the Fed is more transparent now than it was 20 or 30 years ago, there is still a long way to go. If the Fed were fully transparent, organizations such as Bloomberg and Fox News wouldn't have to sue its board of governors to receive materials that should be available through Freedom of Information Act requests. These include information on which banks and companies received loans and for what amounts after the 2008 financial meltdown.
One puzzling assertion made by the Fed and its supporters is that the Federal Reserve has some sort of independence from the government and independence in undertaking monetary policy. Nothing could be further from the truth. The Federal Reserve is a government-created banking monopoly, and its top decision makers are appointed by the president and confirmed by the Senate. If they do not perform satisfactorily in the eyes of politicians, they will not be renominated.
The Fed has also, for the past three decades, been required to engage in monetary policy with the goal of maintaining stable prices and full employment. Since the natural trend over time is for prices to decrease, a mandate to maintain stable prices is a mandate to pursue an expansionary monetary policy and inflate the money supply to counteract the lower prices we would expect from increased productivity.
The Fed chairman is required to appear twice a year before Congress to explain the Fed's actions, and how the Fed is complying with its mandates of stable prices and full employment. However, the idea that this constitutes any sort of oversight is laughable.
Each congressman who questions the chairman receives only a few minutes in which to ask questions and receive answers. Having been on the receiving end of Alan Greenspan's notoriously obtuse "Greenspan-Speak" answers and Ben Bernanke's similarly convoluted statements, we can assure you that the process is completely ineffective at getting any real answers.
No matter how direct the questions are, Fed chairmen answer with a vagueness common to bureaucrats. The whole process is window dressing for public consumption, not any sort of attempt to exercise oversight or gain any real insight into the Fed's actions.
What is needed is a full audit of the Fed, something that has never happened. We need to know who the Fed is giving money to, what types of securities are being purchased and what backs those securities, how much money is being paid for those securities, etc.
While Rep. Mel Watt's (D., N.C.) efforts to audit the new lending facilities authorized to bail out private firms such as AIG is a step in the right direction, it is still just a first step. These facilities have the same effect on the money supply as securities purchased through open market operations. Why should securities placed on one line of the Fed's balance sheet be subject to audit while the exact same securities placed elsewhere on the balance sheet are not subject to audit? The loopholes need to be closed.
In coming weeks we plan to offer companion amendments to legislation already before the House and Senate that will open the Fed up to a complete audit. The amendments set a six-month time lag on the publication of previously unreleased audit data to address the Fed's concerns that actions undertaken in support of monetary policy would immediately be politicized. The transcripts and minutes of the Federal Open Market Committee meetings would continue to be made public at the Fed's discretion, with unpublicized details of meetings not subject to any additional scrutiny. Finally, the amendments make clear that the purpose of the audits is not to interfere with or dictate monetary policy.
As strong opponents of government intervention into the economy, we do not want to see Congress directly dictate monetary policy. But while the Fed is involved so heavily in monetary policy and its actions so heavily influence the future of our economy, it is necessary that it be fully transparent. Interventions into the economy on the order of trillions of dollars cannot continue to escape public scrutiny. American taxpayers deserve better.
—Mr. Paul is a Republican congressman from Texas. Mr. DeMint is a Republican senator from South Carolina.
Dodd Bill Covertly Eliminates Already Passed Legislation Requiring Full Fed Audit
Here we see Chris Dodd once again supporting the Fed and deceptively trying to eliminate a Fed audit. If 70-80% of the American people want a Fed audit – why would a Senator try to stop it? Easy – he doesn’t care about the American people.
Senator Dodd is following a different agenda – an agenda that supports the international banking cartel – not the American people.
jg – April 23, 2010
__________________________
Alan Grayson Discloses That Dodd Bill Covertly Eliminates Already Passed Legislation Requiring Full Fed Audit
www.zerohedge.com
Submitted by Tyler Durden on 04/23/2010 10:07 -0500
Once again we get confirmation that Chris Dodd is nothing but a paid manservant for his Federal Reserve masters, in addition to being a lame duck, whose last days in office are meant to do everything to allow the old-school Wall Street ways of endless secrecy and Fed bailouts to continue in perpetuity. As Ryan Grim points out "Alan Grayson and co-author Rep. Ron Paul passed legislation through the House that would allow the Government Accountability Office (GAO) to audit the Federal Reserve and, after a delay, release the information to Congress. It was a remarkable victory, with a populist coalition beating back the combined lobbying efforts of the Treasury Department, the Fed and Wall Street banks. The Senate has been more hostile territory for the Fed audit provision. Banking Committee Chairman Chris Dodd (D-Conn.) opposes the Grayson-Paul version, but allowed a much more restrictive audit proposal from Sen. Jeff Merkley (D-Oregon) into his bill." Why and how Dodd believes he can stand against this critical issue, that over 80% of America supports by demanding Fed transparency, is beyond any rational attempts at explanation. How he hopes to get away with it is even more mindboggling.
From the Huffington Post:
The Wall Street reform bill headed for a test vote on the Senate floor Monday night will allow the Federal Reserve to continue to pump trillions of dollars into major banks largely in secrecy, the co-author of House language that would open the central bank to an audit charged in a memo to the Senate.
"The Senate has a provision in its reform bill that purports to audit the Fed. But, it really doesn't do anything of the sort. I'm going to run down the details for you, and reprint the legislative language so you can read it yourself," writes Rep. Alan Grayson (D-Fla.).
Grayson's summary of the bill's shortcomings, presented below, indicate that the "Seante bill would allow an audit of the TALF program and slightly expands authority to audit emergency lending conducted under section 13(3) of the Federal Reserve Act, but restricts it to very specific purposes. Meanwhile, it would not allow the GAO to look into the Fed's massive purchase of toxic assets, its hundreds of billions in foreign currency swaps with other central banks or its open market operations, among other restrictions."
Jeff Merkley, whose language was used instead of the passed Grayson-Paul version, has this to say:
"I appreciate Representative Grayson's concerns over accountability at the Federal Reserve. I have been a strong proponent of Fed reform and voted against the re-confirmation of Ben Bernanke because the Fed has been so lax in using its regulatory powers. Moreover, I felt strongly that we need to act now to empower the GAO to audit the extraordinary emergency programs created by the Fed and I succeeded in getting that power into the Senate bill. Rep. Grayson points out, fairly in my mind, that we need to go even further to audit the Fed's standing programs. I agree. While we need to protect the Fed's independence to implement monetary policy, I think the structure and use of their standard programs should be transparent."
There can be no compromise on this issue. Congress and America have spoken. If Dodd believes he can usurp the democratic process in this most critical of issues, which allows the entity in charge of money printing with practically the same liberties as it had when it bailed out in full secrecy every bank in the US and threw countless generations of working-class Americans in a debt-induced coma, it is one thing. If he manages to get away with, it either shows that the degree of apathy demonstrated by US citizens is indicative that nothing can save this country, or that any pretense of democracy in America has been trampled in our accelerating conversion to an autocratic state.
Grayson's memo which confirms just how useless Dodd's "Fed audit" provisions are:
Memo to the Senate: Stop Secret Bailouts by the Fed
Sometimes, you just know that you've struck a nerve. I knew it early last year, when a clip of my questioning the Inspector General of the Federal Reserve over the Fed's balance sheet became the most viewed Congressional hearing in YouTube history. The Fed had lent out around $1 trillion, and I wanted to know what happened to the people's money. So did the people.
They were angry at the Fed, and they showed it. And because of that righteous anger, the financial reform bill in the House contains a provision to audit the Federal Reserve fully. If it passes the Senate, we will finally know to whom the Fed lent our money, how much, and what little we got in return.
So it's up to the Senate. The Senate has a provision in its reform bill that purports to audit the Fed. But, it really doesn't do anything of the sort. I'm going to run down the details for you, and reprint the legislative language so you can read it yourself. But the story is simple; if the House version of a Fed audit passes, we will finally know to whom the Fed lent our money. If the Senate version passes, the Fed can continue to make sweetheart loans to whomever it wants, without telling Congress or the public.
The way Congress oversees complicated government agencies is through the Congressional audit arm, the Government Accountability Office (GAO). The GAO does the actual auditing, and gives that information to Congress, which then holds hearings and makes policy. The House bill grants the GAO the authority to audit the Fed, and then releases that information to Congress with a six-month delay, to prevent traders from gaming the system.
The Senate version only allows the GAO to audit a certain part of the Federal Reserve, its emergency lending facilities. The GAO already has some of that authority. Amazingly, the Senate version forces the GAO to withhold this information from the public, and Congress, for as long as the Federal Reserve chooses.
The details, and the specific legislative language, are below.
Limited Audit Authority
What the Senate bill allows:
- The Senate language slightly expands existing authority to the GAO to audit only the emergency lending authority in section 13(3) of the Federal Reserve Act, but only for specific purposes.
- The Senate language would grant the GAO authority to audit the TALF program.
What the bill does NOT allow:
- The Senate language does not allow audits of the mortgage backed security purchase program, a $1.25 trillion program that at this point comprises the bulk of the Fed's balance sheet. This program includes Freddie and Fannie backed debt.
- The Senate language does not allow audits of possible losses on foreign currency swap lines, of which there were more than $500 billion at the height of the crisis. This includes unlimited credit lines granted to central banks all over the world, solely through at the discretion of Federal Reserve and without the input of any elected official or the State Department.
- The Senate language does not allow audits of open market operations, where there is ample room for errors, market manipulation, and insider trading violations.
- The Senate language does not allow audits of possible losses on securities acquired through non-section 13(3) facilities. This includes looking for possible losses, seigniorage, political conflicts and costs to the Treasury.
Federal Reserve Secrecy
- In the Senate version, all audits must remain redacted. The GAO can't even tell Congress to whom the Fed is lending money, the amounts it is lending, or any details about collateral or assets held in connection with any credit facility.
- The GAO can never release a full version of any audit unless the Federal Reserve first chooses to shut down the audited credit facility.
- Once the Federal Reserve shuts down the authority for the credit facility, the GAO still has to wait a year before it can release details about that facility. If the Fed simply chooses to stop making loans, but does not eliminate the authority to make loans, the GAO has to wait three years before it can release a full report. The Fed can at any point during this period choose to restart the facility, and thereby prevent the release of a full report.
See for yourself. The legislative language in the Senate draft is here.
Sec. 714. Audit of Financial Institutions Examination Council,
Federal Reserve Board, Federal Reserve banks, Federal Deposit Insurance Corporation, and Office of Comptroller of the Currency
(a) In this section, "agency" means the Financial Institutions Examination Council, the Board of Governors of the Federal Reserve System (in this section referred to as the `Board'), Federal Reserve Banks, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.
(b) Under regulations of the Comptroller General, the Comptroller General shall audit an agency, but may carry out an onsite examination of an open insured bank or bank holding company only if the appropriate agency has consented in writing. Audits of the Board and Federal reserve banks may not include -
(1) transactions for or with a foreign central bank, government of a foreign country, or non-private international financing organization;
(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;
(3) transactions made under the direction of the Federal Open Market Committee; or
(4) a part of a discussion or communication among or between members of the Board and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection.
(c)(1) Except as provided in this subsection, an officer or employee of the Government Accountability Office may not disclose information identifying an open bank, an open bank holding company, or a customer of an open or closed bank or bank holding company. The Comptroller General may disclose information related to the affairs of a closed bank or closed bank holding company identifying a customer of the closed bank or closed bank holding company only if the Comptroller General believes the customer had a controlling influence in the management of the closed bank or closed bank holding company or was related to or affiliated with a person or group having a controlling influence.
(2) An officer or employee of the Office may discuss a customer, bank, or bank holding company with an official of an agency and may report an apparent criminal violation to an appropriate law enforcement authority of the United States Government or a State.
(3) Except as provided under paragraph (4), an officer or employee of the Government Accountability Office may not disclose to any person outside the Government Accountability Office information obtained in audits or examinations conducted under subsection (e) and maintained as confidential by the Board or the Federal Reserve banks.
(4) This subsection shall not--
(A) authorize an officer or employee of an agency to withhold information from any committee or subcommittee of jurisdiction of Congress, or any member of such committee or subcommittee; or
(B) limit any disclosure by the Government Accountability Office to any committee or subcommittee of jurisdiction of Congress, or any member of such committee or subcommittee.
(d)(1) To carry out this section, all records and property of or used by an agency, including samples of reports of examinations of a bank or bank holding company the Comptroller General considers statistically meaningful and workpapers and correspondence related to the reports shall be made available to the Comptroller General. The Comptroller General shall have access to the officers, employees, contractors, and other agents and representatives of an agency and any entity established by an agency at any reasonable time as the Comptroller General may request. The Comptroller General may make and retain copies of such books, accounts, and other records as the Comptroller General determines appropriate. The Comptroller General shall give an agency a current list of officers and employees to whom, with proper identification, records and property may be made available, and who may make notes or copies necessary to carry out an audit.
(2) The Comptroller General shall prevent unauthorized access to Records, copies of any Record, or property of or used by an agency that the Comptroller General obtains during an audit.
(3)(A) For purposes of conducting audits and examinations under subsection (e), the Comptroller General shall have access, upon request, to any information, data, schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things or property belonging to or in use by--
"(i) any entity established by any action taken by the Board described under subsection (e);
"(ii) any entity receiving assistance from any action taken by the Board described under subsection (e), to the extent that the access and request relates to that assistance; and
(iii) the officers, directors, employees, independent public accountants, financial advisors and any and all representatives of any entity described under clause (i) or (ii); to the extent that the access and request relates to that assistance;
(B) The Comptroller General shall have access as provided under subparagraph (A) at such time as the Comptroller General may request.
(C) Each contract, term sheet, or other agreement between the Board or any Federal reserve bank (or any entity established by the Board or any Federal reserve bank) and an entity receiving assistance from any action taken by the Board described under subsection (e) shall provide for access by the Comptroller General in accordance with this paragraph.
(e) Notwithstanding subsection (b), the Comptroller General may conduct audits, including onsite examinations when the Comptroller General determines such audits and examinations are appropriate, of any action taken by the Board under the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343); with respect to a single and specific partnership or corporation.'
(f) REVIEWS OF CREDIT FACILITIES OF THE FEDERAL RESERVE SYSTEM.--
(1) DEFINITION.--In this subsection, the term 'credit facility' means any utility, facility, or program authorized by the Board of Governors of the Federal Reserve System under the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343), including any special purpose vehicle or other entity established by or on behalf of the Board of Governors or a Federal reserve bank, that is not subject to audit under subsection (e), including--
(A) the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility;
(B) the Term Asset-Backed Securities Loan Facility;
(C) the Primary Dealer Credit Facility;
(D) the Commercial Paper Funding Facility; and
(E) the Term Securities Lending Facility.
(2) AUTHORITY FOR REVIEWS AND EXAMINATIONS.--Subject to paragraph (3), and notwithstanding any limitation in subsection (b) on the auditing and oversight of certain functions of the Board of Governors of the Federal Reserve System or any Federal reserve bank, the Comptroller General of the United States may conduct reviews, including onsite examinations, of the Board of Governors, a Federal reserve bank, or a credit facility, if the Comptroller General determines that such reviews are appropriate, solely for the purposes of assessing, with respect to a credit facility--
(A) the operational integrity, accounting, financial reporting, and internal controls of the credit facility;
(B) the effectiveness of the collateral policies established for the facility in mitigating risk to the relevant Federal reserve bank and taxpayers;
(C) whether the credit facility inappropriately favors one or more specific participants over other institutions eligible to utilize the facility; and
(D) the policies governing the use, selection, or payment of third-party contractors by or for any credit facility.
(3) REPORTS AND DELAYED DISCLOSURE.--
(A) REPORTS REQUIRED.--A report on each review conducted under paragraph shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such review is completed.
(B) CONTENTS.--The report under subparagraph (A) shall include a detailed description of the findings and conclusions of the Comptroller General with respect to the matters described in paragraph (2) that were reviewed and are the subject of the report, together with such recommendations for legislative or administrative action relating to such matters as the Comptroller General may determine to be appropriate.
(C) DELAYED RELEASE OF CERTAIN INFORMATION.--
(i) IN GENERAL.--The Comptroller General shall not disclose to any person or entity, including to Congress, the names or identifying details of specific participants in any credit facility, the amounts borrowed by specific participants in any credit facility, or identifying details regarding assets or collateral held by, under, or in connection with any credit facility, and any report provided under subparagraph (A) shall be redacted to ensure that such names and details are not disclosed.
(ii) DELAYED RELEASE.--The non-disclosure obligation under clause (i) shall expire with respect to any participant on the date on which the Board of Governors, directly or through a Federal reserve bank, publicly discloses the identity of the subject participant or the identifying details of the subject assets or collateral.
(iii) GENERAL RELEASE.--The Comptroller General shall release a non redacted version of any report on a credit facility 1 year after the effective date of the termination by the Board of Governors of the authorization for the credit facility. For purposes of this clause, a credit facility shall be deemed to have terminated 24 months after the date on which the credit facility ceases to make extensions of credit and loans, unless the credit facility is otherwise terminated by the Board of Governors.
(iv) EXCEPTIONS.--The nondisclosure obligation under clause (i) shall not apply to the credit facilities Maiden Lane, Maiden Lane II, and Maiden Lane III.
Senator Dodd is following a different agenda – an agenda that supports the international banking cartel – not the American people.
jg – April 23, 2010
__________________________
Alan Grayson Discloses That Dodd Bill Covertly Eliminates Already Passed Legislation Requiring Full Fed Audit
www.zerohedge.com
Submitted by Tyler Durden on 04/23/2010 10:07 -0500
Once again we get confirmation that Chris Dodd is nothing but a paid manservant for his Federal Reserve masters, in addition to being a lame duck, whose last days in office are meant to do everything to allow the old-school Wall Street ways of endless secrecy and Fed bailouts to continue in perpetuity. As Ryan Grim points out "Alan Grayson and co-author Rep. Ron Paul passed legislation through the House that would allow the Government Accountability Office (GAO) to audit the Federal Reserve and, after a delay, release the information to Congress. It was a remarkable victory, with a populist coalition beating back the combined lobbying efforts of the Treasury Department, the Fed and Wall Street banks. The Senate has been more hostile territory for the Fed audit provision. Banking Committee Chairman Chris Dodd (D-Conn.) opposes the Grayson-Paul version, but allowed a much more restrictive audit proposal from Sen. Jeff Merkley (D-Oregon) into his bill." Why and how Dodd believes he can stand against this critical issue, that over 80% of America supports by demanding Fed transparency, is beyond any rational attempts at explanation. How he hopes to get away with it is even more mindboggling.
From the Huffington Post:
The Wall Street reform bill headed for a test vote on the Senate floor Monday night will allow the Federal Reserve to continue to pump trillions of dollars into major banks largely in secrecy, the co-author of House language that would open the central bank to an audit charged in a memo to the Senate.
"The Senate has a provision in its reform bill that purports to audit the Fed. But, it really doesn't do anything of the sort. I'm going to run down the details for you, and reprint the legislative language so you can read it yourself," writes Rep. Alan Grayson (D-Fla.).
Grayson's summary of the bill's shortcomings, presented below, indicate that the "Seante bill would allow an audit of the TALF program and slightly expands authority to audit emergency lending conducted under section 13(3) of the Federal Reserve Act, but restricts it to very specific purposes. Meanwhile, it would not allow the GAO to look into the Fed's massive purchase of toxic assets, its hundreds of billions in foreign currency swaps with other central banks or its open market operations, among other restrictions."
Jeff Merkley, whose language was used instead of the passed Grayson-Paul version, has this to say:
"I appreciate Representative Grayson's concerns over accountability at the Federal Reserve. I have been a strong proponent of Fed reform and voted against the re-confirmation of Ben Bernanke because the Fed has been so lax in using its regulatory powers. Moreover, I felt strongly that we need to act now to empower the GAO to audit the extraordinary emergency programs created by the Fed and I succeeded in getting that power into the Senate bill. Rep. Grayson points out, fairly in my mind, that we need to go even further to audit the Fed's standing programs. I agree. While we need to protect the Fed's independence to implement monetary policy, I think the structure and use of their standard programs should be transparent."
There can be no compromise on this issue. Congress and America have spoken. If Dodd believes he can usurp the democratic process in this most critical of issues, which allows the entity in charge of money printing with practically the same liberties as it had when it bailed out in full secrecy every bank in the US and threw countless generations of working-class Americans in a debt-induced coma, it is one thing. If he manages to get away with, it either shows that the degree of apathy demonstrated by US citizens is indicative that nothing can save this country, or that any pretense of democracy in America has been trampled in our accelerating conversion to an autocratic state.
Grayson's memo which confirms just how useless Dodd's "Fed audit" provisions are:
Memo to the Senate: Stop Secret Bailouts by the Fed
Sometimes, you just know that you've struck a nerve. I knew it early last year, when a clip of my questioning the Inspector General of the Federal Reserve over the Fed's balance sheet became the most viewed Congressional hearing in YouTube history. The Fed had lent out around $1 trillion, and I wanted to know what happened to the people's money. So did the people.
They were angry at the Fed, and they showed it. And because of that righteous anger, the financial reform bill in the House contains a provision to audit the Federal Reserve fully. If it passes the Senate, we will finally know to whom the Fed lent our money, how much, and what little we got in return.
So it's up to the Senate. The Senate has a provision in its reform bill that purports to audit the Fed. But, it really doesn't do anything of the sort. I'm going to run down the details for you, and reprint the legislative language so you can read it yourself. But the story is simple; if the House version of a Fed audit passes, we will finally know to whom the Fed lent our money. If the Senate version passes, the Fed can continue to make sweetheart loans to whomever it wants, without telling Congress or the public.
The way Congress oversees complicated government agencies is through the Congressional audit arm, the Government Accountability Office (GAO). The GAO does the actual auditing, and gives that information to Congress, which then holds hearings and makes policy. The House bill grants the GAO the authority to audit the Fed, and then releases that information to Congress with a six-month delay, to prevent traders from gaming the system.
The Senate version only allows the GAO to audit a certain part of the Federal Reserve, its emergency lending facilities. The GAO already has some of that authority. Amazingly, the Senate version forces the GAO to withhold this information from the public, and Congress, for as long as the Federal Reserve chooses.
The details, and the specific legislative language, are below.
Limited Audit Authority
What the Senate bill allows:
- The Senate language slightly expands existing authority to the GAO to audit only the emergency lending authority in section 13(3) of the Federal Reserve Act, but only for specific purposes.
- The Senate language would grant the GAO authority to audit the TALF program.
What the bill does NOT allow:
- The Senate language does not allow audits of the mortgage backed security purchase program, a $1.25 trillion program that at this point comprises the bulk of the Fed's balance sheet. This program includes Freddie and Fannie backed debt.
- The Senate language does not allow audits of possible losses on foreign currency swap lines, of which there were more than $500 billion at the height of the crisis. This includes unlimited credit lines granted to central banks all over the world, solely through at the discretion of Federal Reserve and without the input of any elected official or the State Department.
- The Senate language does not allow audits of open market operations, where there is ample room for errors, market manipulation, and insider trading violations.
- The Senate language does not allow audits of possible losses on securities acquired through non-section 13(3) facilities. This includes looking for possible losses, seigniorage, political conflicts and costs to the Treasury.
Federal Reserve Secrecy
- In the Senate version, all audits must remain redacted. The GAO can't even tell Congress to whom the Fed is lending money, the amounts it is lending, or any details about collateral or assets held in connection with any credit facility.
- The GAO can never release a full version of any audit unless the Federal Reserve first chooses to shut down the audited credit facility.
- Once the Federal Reserve shuts down the authority for the credit facility, the GAO still has to wait a year before it can release details about that facility. If the Fed simply chooses to stop making loans, but does not eliminate the authority to make loans, the GAO has to wait three years before it can release a full report. The Fed can at any point during this period choose to restart the facility, and thereby prevent the release of a full report.
See for yourself. The legislative language in the Senate draft is here.
Sec. 714. Audit of Financial Institutions Examination Council,
Federal Reserve Board, Federal Reserve banks, Federal Deposit Insurance Corporation, and Office of Comptroller of the Currency
(a) In this section, "agency" means the Financial Institutions Examination Council, the Board of Governors of the Federal Reserve System (in this section referred to as the `Board'), Federal Reserve Banks, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.
(b) Under regulations of the Comptroller General, the Comptroller General shall audit an agency, but may carry out an onsite examination of an open insured bank or bank holding company only if the appropriate agency has consented in writing. Audits of the Board and Federal reserve banks may not include -
(1) transactions for or with a foreign central bank, government of a foreign country, or non-private international financing organization;
(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;
(3) transactions made under the direction of the Federal Open Market Committee; or
(4) a part of a discussion or communication among or between members of the Board and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection.
(c)(1) Except as provided in this subsection, an officer or employee of the Government Accountability Office may not disclose information identifying an open bank, an open bank holding company, or a customer of an open or closed bank or bank holding company. The Comptroller General may disclose information related to the affairs of a closed bank or closed bank holding company identifying a customer of the closed bank or closed bank holding company only if the Comptroller General believes the customer had a controlling influence in the management of the closed bank or closed bank holding company or was related to or affiliated with a person or group having a controlling influence.
(2) An officer or employee of the Office may discuss a customer, bank, or bank holding company with an official of an agency and may report an apparent criminal violation to an appropriate law enforcement authority of the United States Government or a State.
(3) Except as provided under paragraph (4), an officer or employee of the Government Accountability Office may not disclose to any person outside the Government Accountability Office information obtained in audits or examinations conducted under subsection (e) and maintained as confidential by the Board or the Federal Reserve banks.
(4) This subsection shall not--
(A) authorize an officer or employee of an agency to withhold information from any committee or subcommittee of jurisdiction of Congress, or any member of such committee or subcommittee; or
(B) limit any disclosure by the Government Accountability Office to any committee or subcommittee of jurisdiction of Congress, or any member of such committee or subcommittee.
(d)(1) To carry out this section, all records and property of or used by an agency, including samples of reports of examinations of a bank or bank holding company the Comptroller General considers statistically meaningful and workpapers and correspondence related to the reports shall be made available to the Comptroller General. The Comptroller General shall have access to the officers, employees, contractors, and other agents and representatives of an agency and any entity established by an agency at any reasonable time as the Comptroller General may request. The Comptroller General may make and retain copies of such books, accounts, and other records as the Comptroller General determines appropriate. The Comptroller General shall give an agency a current list of officers and employees to whom, with proper identification, records and property may be made available, and who may make notes or copies necessary to carry out an audit.
(2) The Comptroller General shall prevent unauthorized access to Records, copies of any Record, or property of or used by an agency that the Comptroller General obtains during an audit.
(3)(A) For purposes of conducting audits and examinations under subsection (e), the Comptroller General shall have access, upon request, to any information, data, schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things or property belonging to or in use by--
"(i) any entity established by any action taken by the Board described under subsection (e);
"(ii) any entity receiving assistance from any action taken by the Board described under subsection (e), to the extent that the access and request relates to that assistance; and
(iii) the officers, directors, employees, independent public accountants, financial advisors and any and all representatives of any entity described under clause (i) or (ii); to the extent that the access and request relates to that assistance;
(B) The Comptroller General shall have access as provided under subparagraph (A) at such time as the Comptroller General may request.
(C) Each contract, term sheet, or other agreement between the Board or any Federal reserve bank (or any entity established by the Board or any Federal reserve bank) and an entity receiving assistance from any action taken by the Board described under subsection (e) shall provide for access by the Comptroller General in accordance with this paragraph.
(e) Notwithstanding subsection (b), the Comptroller General may conduct audits, including onsite examinations when the Comptroller General determines such audits and examinations are appropriate, of any action taken by the Board under the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343); with respect to a single and specific partnership or corporation.'
(f) REVIEWS OF CREDIT FACILITIES OF THE FEDERAL RESERVE SYSTEM.--
(1) DEFINITION.--In this subsection, the term 'credit facility' means any utility, facility, or program authorized by the Board of Governors of the Federal Reserve System under the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343), including any special purpose vehicle or other entity established by or on behalf of the Board of Governors or a Federal reserve bank, that is not subject to audit under subsection (e), including--
(A) the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility;
(B) the Term Asset-Backed Securities Loan Facility;
(C) the Primary Dealer Credit Facility;
(D) the Commercial Paper Funding Facility; and
(E) the Term Securities Lending Facility.
(2) AUTHORITY FOR REVIEWS AND EXAMINATIONS.--Subject to paragraph (3), and notwithstanding any limitation in subsection (b) on the auditing and oversight of certain functions of the Board of Governors of the Federal Reserve System or any Federal reserve bank, the Comptroller General of the United States may conduct reviews, including onsite examinations, of the Board of Governors, a Federal reserve bank, or a credit facility, if the Comptroller General determines that such reviews are appropriate, solely for the purposes of assessing, with respect to a credit facility--
(A) the operational integrity, accounting, financial reporting, and internal controls of the credit facility;
(B) the effectiveness of the collateral policies established for the facility in mitigating risk to the relevant Federal reserve bank and taxpayers;
(C) whether the credit facility inappropriately favors one or more specific participants over other institutions eligible to utilize the facility; and
(D) the policies governing the use, selection, or payment of third-party contractors by or for any credit facility.
(3) REPORTS AND DELAYED DISCLOSURE.--
(A) REPORTS REQUIRED.--A report on each review conducted under paragraph shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such review is completed.
(B) CONTENTS.--The report under subparagraph (A) shall include a detailed description of the findings and conclusions of the Comptroller General with respect to the matters described in paragraph (2) that were reviewed and are the subject of the report, together with such recommendations for legislative or administrative action relating to such matters as the Comptroller General may determine to be appropriate.
(C) DELAYED RELEASE OF CERTAIN INFORMATION.--
(i) IN GENERAL.--The Comptroller General shall not disclose to any person or entity, including to Congress, the names or identifying details of specific participants in any credit facility, the amounts borrowed by specific participants in any credit facility, or identifying details regarding assets or collateral held by, under, or in connection with any credit facility, and any report provided under subparagraph (A) shall be redacted to ensure that such names and details are not disclosed.
(ii) DELAYED RELEASE.--The non-disclosure obligation under clause (i) shall expire with respect to any participant on the date on which the Board of Governors, directly or through a Federal reserve bank, publicly discloses the identity of the subject participant or the identifying details of the subject assets or collateral.
(iii) GENERAL RELEASE.--The Comptroller General shall release a non redacted version of any report on a credit facility 1 year after the effective date of the termination by the Board of Governors of the authorization for the credit facility. For purposes of this clause, a credit facility shall be deemed to have terminated 24 months after the date on which the credit facility ceases to make extensions of credit and loans, unless the credit facility is otherwise terminated by the Board of Governors.
(iv) EXCEPTIONS.--The nondisclosure obligation under clause (i) shall not apply to the credit facilities Maiden Lane, Maiden Lane II, and Maiden Lane III.
Americans are Waking Up - May 13, 2010
Americans are waking up to what is happening to us. Despite the best efforts of our political leadership (see: President Obama and Chris Dodd) - the people of the United States continue to push for a real Federal Reserve Audit (Ron Paul).
Zerohedge.com recently posted a lawsuit that has been filed against the New York Federal Reserve (link below). Now - the Fed is fighting off audits and lawsuits. This is why I expect a catastrophic 'event' very soon.
http://www.zerohedge.com/article/presenting-western-district-north-carolina-case-10-cv-200
These guys will not go down without a fight. Once they crash stock markets - their hope is that we all forget about who actually caused all of this - and instead focus on the wonderful new solution they will propose.
Then - the real battle will begin.
jg - May 13, 2010
Zerohedge.com recently posted a lawsuit that has been filed against the New York Federal Reserve (link below). Now - the Fed is fighting off audits and lawsuits. This is why I expect a catastrophic 'event' very soon.
http://www.zerohedge.com/article/presenting-western-district-north-carolina-case-10-cv-200
These guys will not go down without a fight. Once they crash stock markets - their hope is that we all forget about who actually caused all of this - and instead focus on the wonderful new solution they will propose.
Then - the real battle will begin.
jg - May 13, 2010
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