Here are some excerpts from yesterday’s Bloomberg report by Bob Ivry, Bradley Keoun and Phil Kuntz with its dramatic revelations of the secret $7.77 trillion given by the Fed to banks “too big to fail”, money which went primarily and unjustly for compensation of said banksters at the price of ever-intensifying taxpayer suffering.
These loans also enabled the big boy banks to continue their economic recklessness and to lobby a Congress ignorant of the outrageous extent of the Fed benevolent loaning and the actual status of just how unstable these banks were against SERIOUS regulation. Had transparency of the Fed’s continued largesse existed more serious regulations may well have been imposed!
At least 1 in 5 children in America is going hungry but the corporate "bonus babies" got theirs thanks to their crony pals of the Fed, in Congress and in the Bush and Obama administrations!
(The excerpts are followed by an article I did last year on Kucinich’s HR 2424 bill to end the Fed.)
Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.
A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.
snip
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.
“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”
snip
The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak.
The Treasury Department relied on the recommendations of the Fed to decide which banks were healthy enough to get TARP money and how much, the former officials say. The six biggest U.S. banks, which received $160 billion of TARP funds, borrowed as much as $460 billion from the Fed, measured by peak daily debt calculated by Bloomberg using data obtained from the central bank. Paulson didn’t respond to a request for comment.
The six -- JPMorgan, Bank of America, Citigroup Inc. (C), Wells Fargo & Co. (WFC), Goldman Sachs Group Inc. (GS) and Morgan Stanley -- accounted for 63 percent of the average daily debt to the Fed by all publicly traded U.S. banks, money managers and investment- services firms, the data show. By comparison, they had about half of the industry’s assets before the bailout, which lasted from August 2007 through April 2010. The daily debt figure excludes cash that banks passed along to money-market funds.
snip
Frank co-sponsored the Dodd-Frank Wall Street Reform and Consumer Protection Act, billed as a fix for financial-industry excesses. Congress debated that legislation in 2010 without a full understanding of how deeply the banks had depended on the Fed for survival.
It would have been “totally appropriate” to disclose the lending data by mid-2009, says David Jones, a former economist at the Federal Reserve Bank of New York who has written four books about the central bank.
“The Fed is the second-most-important appointed body in the U.S., next to the Supreme Court, and we’re dealing with a democracy,” Jones says. “Our representatives in Congress deserve to have this kind of information so they can oversee the Fed.”
snip
“Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it,” Shaffer says.
Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.
Lawmakers knew none of this.
They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.
Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs.
Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.
snip
Byron L. Dorgan, a former Democratic senator from North Dakota, says the knowledge might have helped pass legislation to reinstate the Glass-Steagall Act, which for most of the last century separated customer deposits from the riskier practices of investment banking.
“Had people known about the hundreds of billions in loans to the biggest financial institutions, they would have demanded Congress take much more courageous actions to stop the practices that caused this near financial collapse,” says Dorgan, who retired in January.
Instead, the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.
Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data.
snip
Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.
“The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.”
snip
Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up -- a gain of 33 percent, according to OpenSecrets.org, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, OpenSecrets.org reported.
snip
“The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process,” Williamson says. “The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.”
snip
Dodd-Frank does provide a mechanism for regulators to break up the biggest banks. It established the Financial Stability Oversight Council that could order teetering banks to shut down in an orderly way. The council is headed by Geithner.
“Dodd-Frank does not solve the problem of too big to fail,” says Shelby, the Alabama Republican. “Moral hazard and taxpayer exposure still very much exist.”
snip
The 190 firms for which data were available would have produced income of $13 billion, assuming all of the bailout funds were invested at the margins reported, the data show.
snip
In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise -- to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).
The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California.
The Tea Party, which supports a more limited role for government, has its roots in anger over the Wall Street bailouts, says Neil M. Barofsky, former TARP special inspector general and a Bloomberg Television contributing editor.
“The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”
-------
"Can Kucinich Drive A Stake Through the Zombie Heart of the Fed? ..."
Submitted by libbyliberal on Wed, 02/02/2011 - 1:10am
Stop talking about Kucinich and the olive pit. Forget about the ride on Air Force One.
Kucinich has positioned himself to plunge a stake through the zombie heart of the arch enemy of American well being, The Federal Reserve Bank.
WE HAVE GOT TO HELP HIM AND PAY ATTENTION. The Bank Mafia of America has captured the minds, hearts and souls of almost all of our amoral leadership in the administration and Congress who have to a grotesque degree stopped watchdogging our rights and needs for a stunning amount of time now.
Kucinich’s bill, H.R. 2424, resonates Green Party values. It would bring sanity and wholesome, citizen-nurturing solvency to America. It requires our massive support and attention right now.
Ralph Nader asked the bottom line ultra-sensible question about the insurance industry capture of America during Obama’s, Congress’s and the media’s magnificent health care betrayal kabuki last year. Why are the “vendors” allowed to create the terms of American healthcare, terms that have destroyed, are destroying and will continue to destroy the well-being of most Americans?
Banks should also be providing a much humbler role as “vendors” but are another cabal of profit-over-people monsters impacting more and more people with, again, let’s call it what it is, ECONOMIC TERRORISM.
At a Manhattan Greens forum last Wednesday, guest speaker Sue Peters laid out the incredible and enraging history of how a tiny but obscenely wealthy crew of the bankster mafia in America in 1910 managed to successfully capture the monetary system of America right under the clueless noses of the public.
Consider this quote shared by Ms. Peters:
"Whoever controls the volume of money in our country is absolute master of all industry and commerce...when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate." — James A. Garfield
According to Ms. Peters and some further revelations from Wikipedia, in November 1910, 7 men, a senator (majority leader of the Senate, Nelson Aldrich) and the assistant Secretary of the Treasury Dept. (A. Piatt Andrew) along with 5 of the countries’ leading financiers who represented 1/4 of the world’s wealth arrived at the “Jekyll Island Club” on Jekyll Island off of Georgia ("jackal" would be more appropriate in hindsight) to discuss the American banking system and monetary policy. This meeting would draw up the blueprint for the Federal Reserve System. The creation of a U.S. central bank. Senator Aldrich’s participation guaranteed that parts of the draft would be DIRECTLY incorporated into the 1913 Federal Reserve Act.
Wikipedia, btw, also reveals that Ben Bernanke stayed on Jekyll Island last year for two days in November, the same month of the original plotting, to commemorate the 100th year anniversary of that fateful meeting.
Forbes magazine founder Bertie Charles Forbes wrote:
Picture a party of the nation's greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundred of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written... The utmost secrecy was enjoined upon all. The public must not glean a hint of what was to be done. Senator Aldrich notified each one to go quietly into a private car of which the railroad had received orders to draw up on an unfrequented platform. Off the party set. New York's ubiquitous reporters had been foiled... Nelson (Aldrich) had confided to Henry, Frank, Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the rest of the world, until they had evolved and compiled a scientific currency system for the United States, the real birth of the present Federal Reserve System, the plan done on Jekyll Island in the conference with Paul, Frank and Henry... Warburg is the link that binds the Aldrich system and the present system together. He more than any one man has made the system possible as a working reality.
The meeting had to be clandestine since the mood of people, in fact, internationally, was anti-bank, anti-Wall Street, especially after the Panic of 1907. It was vital for the banksters to devise a highly slick program to seduce a country of citizens mandating quite the opposite of their scheme, that Congress shore up the checks and balances system in terms of the economy. Checks and balances? The banksters willed to dismantle them entirely and deliver the monetary system entirely into their unscrupulous, forever-profits-over-people control.
And so it happened. The same banker-prepared bank plan was presented to Congress by the head of the National Monetary Commission, Senator Aldrich.
This is yet another chapter beyond the Thomas Jefferson and Alexander Hamilton scenario. The power struggle between a citizens’ republic and a banking oligarchy.
Again, the public wanted sane and equitable monetary reform. What did Congress give them? Full out capture by the banksters and pretended it was reform. Sound familiar? The right to private ownership of the national treasury. Hello? Private individuals who thereafter controlled the nation’s money and credit. It was unconstitutional but, hey, look at the allergic to accountability, legality and all that is constitutional Obama administration.
Back then some very serious, resourceful, brave and noble farmer and small business populists fought hard against the travesty, but with a captured Congress and an obtuse and/or passive citizenry, what was to be done?
So the proverbial songs and dances of disinformation happened back then, similar to the ones now. They confused America and allowed Congress to totally defy the mandate of the people.
First, the pretense that the Federal Reserve Bank was to be controlled by Congress, even though the directors were to be chosen by the bankers at least indirectly under the auspices of the executive branch NOT the Congress. The “Federal Advisory Council” would then be chosen by the appointed directors of the 12 Federal Reserve Banks and these council members would remain UNKNOWN to the American people.
A second stage in the song and dance routine was to set up the pretense that the banking system was multi-branched and sole domination would not come from the New York cabal of bankers alone. Appearance vs. reality. Farmers, small businesses, their needs and the needs of other regions of the countries would not ever be a priority. The needs of the Eastern gated-community elite would always prevail. Class war it was and still is.
It is time to restore the American monetary system to its original and legitimate form. Ms. Peters reminded us that when Canada restructured their banking system for the citizenry not the profiteers, universal health care became a natural reality. Universal health care, in shameful, hold out America, is never going to happen with its present, debilitating debt-based economy.
A lot of other restorative things won’t happen here and a lot of worsening things will until the Bank Mafia is defeated and the banking industry is returned to limited and legitimate vendorship and not racketeering.
Kucinich has the answer -- THE RESCUE -- all typed up and entered into Congress. But we know what happened to Ron Paul’s efforts on this score, to disempower the Fed. If we don’t cover Kucinich’s back and DEMAND the legitimate return of the US monetary system to the control of a Congress serving the citizenry and not corporatist pirates, and that will take massive vigilance on our parts, we are dooming our country and future generations to third world serfdom to oligarchs.
The amiable Obama mouthing double-sided song and dance bipartisanship bullshit is desperately trying to keep the economy from foundational recovery as is most of Congress, beholding to the avaricious banksters. I agree with Glen Ford of Black Agenda Report. Obama is an “inside man” for the oligarchy. Some believe he is not that intentionally craven. Okay, maybe Obama with the corporatist elite is more like one of those doomed, delusional love addicts who believes it is possible to get “love from a psychopath.” Whatever. It still dooms us, doesn’t it? Chris Floyd christens Obama the “Continuer in Chief”. Absolutely! Where’s the change? Obama is the king of “shining on” the citizenry. And unbelievably too many keep showing up for another game of Lucy and the football. He talks about “puddles in heaven,” science fairs and a faster internet as the country descends into a quicksand of profound and multiple crises.
The citizenry is confused and betrayed by him and the disinformation campaigns of both legacy parties and the pimped out media continuously guaranteeing that Americans won’t recognize who the true villains are to their own demise. The pragmatic faux-progressives stridently battle fellow victims of the banksters. And then there are the fools who tilt at the non-malignant windmills of a non-existent specter of socialism. All this as soft fascism keeps on hardening in America. It would all be laughable if it weren’t so Orwellianly tragic.
The Kucinich bill could pull America out of its quicksand if we could collectively grasp it, literally and figuratively. Can we? What kind of a tipping point do we need? What kind of a “bottom” must America plunge to until it wakes up and acknowledges the enormous dysfunction of its governance. We can’t rely on a Congress to do the right thing by us on its own.
Robert Malin writes about Dennis Kucinich and his bill:
“As the nation struggles with long-term unemployment at rates not seen in generations, contracted credit and the hoarding of public dollars by the banks, Congressman Kucinich (D-OH) today introduced a dramatic new proposal to establish fiscal integrity, reassert Congressional sovereignty and regain control of monetary policy from private banks. The National Emergency Employment Defense Act of 2010 would allow the federal government to directly fund badly-needed infrastructure repairs and fund education systems nationwide by spending money into circulation without increasing the national debt. The bill would end the current practice of fractional reserve lending, whereby the economy depends upon private financial institutions to lend money into circulation.
Congressman Kucinich stated, “The staggeringly bad employment and economic numbers represent a massive problem which cries out for bold action. Rather than crossing our fingers and hoping that banks will finally lend some of the billions of public dollars they haven’t thus far seen fit to lend, we can take action. My bill would replace the Federal Reserve System’s dependence on private banks to create credit. In its place, a Monetary Authority under the Treasury Department would directly inject liquidity into the economy by purchasing much needed public infrastructure repair. Today, we have idle capital, millions of able-bodied but unemployed workers, unused equipment, and record low interest rates. These conditions are the best possible time to make a long-term investment in our nation’s infrastructure. My bill would do exactly that.”
This is was part of a Kucinich press release about the Federal Reserve Bank in May of 2009:
"The Federal Reserve has been operating in a governmental netherworld, free from scrutiny or oversight. We know the Fed has printed and loaned trillions of dollars, but we don't know where the money went. This bill will finally provide some transparency," said Kucinich."
"Traditionally the Federal Reserve has limited itself to setting the federal funds rate target (the overnight interest rate that banks charge each other) by purchasing government securities. Since August 2007, the Fed has drastically expanded its role in our economic stability by enacting programs to print and lend trillions of dollars directly into the economy."
"Despite the fact that the Fed's actions are a centerpiece of our nation's response to our economic recovery, we know almost nothing about how the Federal Reserve has addressed the crisis. It's time investors and taxpayers obtained a clear picture," added Kucinich.
The Fed has enacted several new programs to address the financial system's crisis including the Term Asset-Backed Securities Loan Facility (TALF), the Mortgage Backed Securities Purchase Program, and a number of other emergency lending programs that are not subject to Congressional oversight.”
Robert Malin does an excellent job explaining Kucinich’s Bill to Restructure the Federal Reserve.
“Dennis Kucinich has prepared a bill that will return control of the monetary system to Congress as it is clearly stated in the constitution. This presents an opportunity for Libertarians led by Ron Paul to get "Constitutionalists" on board with the Progressive Caucus to end the mismanagement of our currency by a banking monopoly, and to reinvest that money into America to repair the damage that the the "Federal Reserve" has done to the economy. We need to move away from a debt based monetary system.”
From the bill:
17) The authority to create money is a sovereign power vested in the Congress under Article I, Section 8 of the Constitution.
(18) The enactment of the Federal Reserve Act in 1913 by Congress effectively delegated the sovereign power to create money, to the Federal Reserve system and private financial industry.
(19) This ceding of Constitutional power has contributed materially to a multitude of monetary and financial afflictions, including—
(A) growing and unreasonable concentration of wealth;
(B) unbridled expansion of national debt, both public and private;
(C) excessive reliance on taxation of citizens for raising public revenues;
(D) inflation of the currency;
(E) drastic increases in the cost of public infrastructure investments;
(F) record levels of unemployment and underemployment; and
(G) persistent erosion of the ability of Congress to exercise its Constitutional responsibilities to provide resources for the general welfare of all the American people.
Malin quoting Kucinich:
“Banks pyramided their value by spending money into existence, greatly inflating the value of bank holdings, inflating the value of their asset bases, enticing unknowing investors to participate in financing schemes like the bundling of subprime mortgages, and ultimately bringing undercapitalized banks and the entire financial system to the edge of ruin, creating circumstances where the taxpayers of the United States were called upon to save the banks from their own imprudent money-issuing practices, misspending and mis-investments. The banks’ ability to create money out of nothing ultimately became the taxpayers’ liability, and raises a fundamental question about a practice of money creation which threatens the wealth of the American people.”
[cross-posted at sacramento for democracy]
--------------
http://www.wsws.org/articles/2011/aug2011/pers-a23.shtml
from article by Barry Grey at end of August about earlier disclosures about Fed:
"The article quotes Robert Litan, a former Justice Department official who in the 1990s served on a commission investigating the savings and loan crisis “These are whopping numbers,” he said. “You're talking about the aristocracy of American finance going down the tubes without the federal money.”
"The Bloomberg report sheds additional light on the manner in which the American capitalist state, under Bush and then Obama, looted the public treasury to bail out the financial elite, and the colossal scale of the sums involved. Money--taxpayer money, that is--was no object when it came to protecting the wealth of the parasites who triggered the financial crash and economic slump with their Ponzi schemes. Yet when it comes to helping millions of families losing their homes to foreclosure or providing jobs to the unemployed, the universal cry is "There is no money!"
"The Bloomberg article points out, for example, that the $1.2 trillion peak in emergency Fed loans reached on December 8, 2008 roughly equals the $1.27 trillion in unpaid principal on 4.38 million US homes whose owners are delinquent on their mortgage payments and the 2.16 million properties that are already in foreclosure.
"Now the Obama administration in the US and its counterparts across Europe are seeking to impose the full cost of the bankrupting of the state on the working class, demanding the destruction of all of the social gains achieved by workers in the course of the 20th century.
"Bloomberg was able to obtain access to Fed documents on the loan programs only after months of Freedom of Information Act requests, which the Fed denied, litigation culminating in a Supreme Court refusal to hear an appeal from major Wall Street banks, and the passage of last year's Dodd-Frank financial overhaul bill. That toothless law requires only that the Fed disclose the identity of its borrowers and the amounts borrowed two years after the event.
"The Fed’s policy of secrecy had two purposes. The first was to assist the banks in concealing the real state of their finances. Bloomberg points out that Morgan Stanley, the biggest single recipient of emergency loans, issued a press release in late September 2008 announcing it had “strong capital and liquidity positions,” while concealing the fact that virtually all of its cash came from a $107.3 billion loan from the Fed.
"The second purpose was to conceal from the American people the scale of the diversion of public resources to the bankers.
"Now, nearly three years after the Wall Street crash and government bailout, no serious financial reforms have been implemented, no banking monopolies have been broken up, let alone seized by the government, not a single major banker has been prosecuted, and none of those responsible for the worst crisis since the Great Depression have been held to account. On the contrary, the banks have recorded record profits and CEO pay has soared, even while the banks continue to sit on billions of dollars in worthless mortgage securities.
"Over the same period, mass unemployment has been used to slash the wages and benefits of workers and intensify their exploitation. Social inequality is greater than ever.
"Nor has the plundering of society for the benefit of the financial elite resolved any of the underlying problems that led to the economic disaster. As recent developments have shown—the slowdown in global economic growth, the downgrading of US debt, the gyrations on world stock markets, the European sovereign debt crisis, the increasing pressure from financial markets on major European and American banks—the crisis is entering a new and even more destructive stage."
snip
The Fed’s secret loans to Wall Street highlight the corrupt relations that pervade the financial industry and its dealings with government regulators and the credit rating agencies. Last April, the Senate Permanent Subcommittee on Investigations released a voluminous report documenting the systemic fraud and criminality that led to the Wall Street crash of September 2008.
"At a press conference announcing the report, the chairman of the committee, Senator Carl Levin (Democrat from Michigan) said that the report “discloses how financial firms deliberately took advantage of their clients and investors, how credit rating agencies assigned AAA ratings to high-risk securities, and how regulators sat on their hands instead of reining in the unsafe and unsound practices all around them. Rampant conflicts of interest are the threats that run through every chapter of this sordid story.”
"Among other things, the report documented in detail how Goldman Sachs and Deutsche Bank sold mortgage-backed securities to investors on the basis of false information at the same time that they were betting the securities would fail.
"This report became a dead letter on the day it was released, and none of those on the committee, including Levin, have pushed for criminal investigations into the illegalities cataloged in the document.
"Instead, the Securities and Exchange Commission (SEC) has settled civil fraud suits against Goldman Sachs and the sub-prime mortgage giant Countrywide Financial out of court, so as to avoid public trials that might expose the corrupt dealings of the financial firms and the collusion of the government.
"The government cover-up for the banks is continuing. On Monday, one day after the appearance of the Bloomberg article, the New York Times reported that the Obama administration is seeking to quash state government investigations into bank fraud in the marketing of mortgage securities. The article explained that administration officials are pressuring New York Attorney General Eric Schneiderman to drop his opposition to a Wall Street-backed settlement of charges arising from the banks’ forging of foreclosure documents. The settlement would bar state governments from pursuing investigations into other criminal actions by the banks.
"This follows the revelation last week by an SEC whistleblower that the agency destroyed thousands of documents stemming from probes into the practices of major Wall Street firms."
from article by Barry Grey at end of August about earlier disclosures about Fed:
"The article quotes Robert Litan, a former Justice Department official who in the 1990s served on a commission investigating the savings and loan crisis “These are whopping numbers,” he said. “You're talking about the aristocracy of American finance going down the tubes without the federal money.”
"The Bloomberg report sheds additional light on the manner in which the American capitalist state, under Bush and then Obama, looted the public treasury to bail out the financial elite, and the colossal scale of the sums involved. Money--taxpayer money, that is--was no object when it came to protecting the wealth of the parasites who triggered the financial crash and economic slump with their Ponzi schemes. Yet when it comes to helping millions of families losing their homes to foreclosure or providing jobs to the unemployed, the universal cry is "There is no money!"
"The Bloomberg article points out, for example, that the $1.2 trillion peak in emergency Fed loans reached on December 8, 2008 roughly equals the $1.27 trillion in unpaid principal on 4.38 million US homes whose owners are delinquent on their mortgage payments and the 2.16 million properties that are already in foreclosure.
"Now the Obama administration in the US and its counterparts across Europe are seeking to impose the full cost of the bankrupting of the state on the working class, demanding the destruction of all of the social gains achieved by workers in the course of the 20th century.
"Bloomberg was able to obtain access to Fed documents on the loan programs only after months of Freedom of Information Act requests, which the Fed denied, litigation culminating in a Supreme Court refusal to hear an appeal from major Wall Street banks, and the passage of last year's Dodd-Frank financial overhaul bill. That toothless law requires only that the Fed disclose the identity of its borrowers and the amounts borrowed two years after the event.
"The Fed’s policy of secrecy had two purposes. The first was to assist the banks in concealing the real state of their finances. Bloomberg points out that Morgan Stanley, the biggest single recipient of emergency loans, issued a press release in late September 2008 announcing it had “strong capital and liquidity positions,” while concealing the fact that virtually all of its cash came from a $107.3 billion loan from the Fed.
"The second purpose was to conceal from the American people the scale of the diversion of public resources to the bankers.
"Now, nearly three years after the Wall Street crash and government bailout, no serious financial reforms have been implemented, no banking monopolies have been broken up, let alone seized by the government, not a single major banker has been prosecuted, and none of those responsible for the worst crisis since the Great Depression have been held to account. On the contrary, the banks have recorded record profits and CEO pay has soared, even while the banks continue to sit on billions of dollars in worthless mortgage securities.
"Over the same period, mass unemployment has been used to slash the wages and benefits of workers and intensify their exploitation. Social inequality is greater than ever.
"Nor has the plundering of society for the benefit of the financial elite resolved any of the underlying problems that led to the economic disaster. As recent developments have shown—the slowdown in global economic growth, the downgrading of US debt, the gyrations on world stock markets, the European sovereign debt crisis, the increasing pressure from financial markets on major European and American banks—the crisis is entering a new and even more destructive stage."
snip
The Fed’s secret loans to Wall Street highlight the corrupt relations that pervade the financial industry and its dealings with government regulators and the credit rating agencies. Last April, the Senate Permanent Subcommittee on Investigations released a voluminous report documenting the systemic fraud and criminality that led to the Wall Street crash of September 2008.
"At a press conference announcing the report, the chairman of the committee, Senator Carl Levin (Democrat from Michigan) said that the report “discloses how financial firms deliberately took advantage of their clients and investors, how credit rating agencies assigned AAA ratings to high-risk securities, and how regulators sat on their hands instead of reining in the unsafe and unsound practices all around them. Rampant conflicts of interest are the threats that run through every chapter of this sordid story.”
"Among other things, the report documented in detail how Goldman Sachs and Deutsche Bank sold mortgage-backed securities to investors on the basis of false information at the same time that they were betting the securities would fail.
"This report became a dead letter on the day it was released, and none of those on the committee, including Levin, have pushed for criminal investigations into the illegalities cataloged in the document.
"Instead, the Securities and Exchange Commission (SEC) has settled civil fraud suits against Goldman Sachs and the sub-prime mortgage giant Countrywide Financial out of court, so as to avoid public trials that might expose the corrupt dealings of the financial firms and the collusion of the government.
"The government cover-up for the banks is continuing. On Monday, one day after the appearance of the Bloomberg article, the New York Times reported that the Obama administration is seeking to quash state government investigations into bank fraud in the marketing of mortgage securities. The article explained that administration officials are pressuring New York Attorney General Eric Schneiderman to drop his opposition to a Wall Street-backed settlement of charges arising from the banks’ forging of foreclosure documents. The settlement would bar state governments from pursuing investigations into other criminal actions by the banks.
"This follows the revelation last week by an SEC whistleblower that the agency destroyed thousands of documents stemming from probes into the practices of major Wall Street firms."
http://cafehayek.com/2011/11/crazy-about-the-fed.html
from Donald J. Boudreaux:
"Bill Keller reports that Glenn Hubbard – Columbia University economist and advisor to Mitt Romney’s campaign – proclaims that “Nobody who is taken seriously as an economist is going to say ‘cancel the Fed’”; such a notion, says Prof. Hubbard, is “just crazy” (“The Politics of Economics in the Age of Shouting,” Nov. 28).
"To propose the abolition of central banking is indeed crazy today – just as, say, proposing the abolition of slavery was crazy in 1812, or proposing the abolition of military conscription was crazy in 1952. The dominance of the unexamined premises of too many Right-thinking Serious people in the past suffocated practical efforts to fundamentally reform the way labor was supplied to plantation owners and, later, to the military. Similar unexamined premises today suffocate practical efforts to fundamentally reform the way money is supplied to the economy.
"As Prof. Hubbard surely knows, though, the case for central banking is hardly settled; it continues to be debated by serious scholars. Prof. Hubbard also surely knows that the case for replacing central banking with a more decentralized, privatized, and competitive arrangement is real and rests on significant theoretical and historical research published in premier outlets and conducted by economists with impeccable scientific credentials – economists such as Kevin Dowd, Steve Horwitz, Benjamin Klein, Kurt Schuler, George Selgin, Richard Timberlake, Gordon Tullock, Lawrence H. White, Leland Yeager, as well as by the late F.A. Hayek and Vera Smith."
from Donald J. Boudreaux:
"Bill Keller reports that Glenn Hubbard – Columbia University economist and advisor to Mitt Romney’s campaign – proclaims that “Nobody who is taken seriously as an economist is going to say ‘cancel the Fed’”; such a notion, says Prof. Hubbard, is “just crazy” (“The Politics of Economics in the Age of Shouting,” Nov. 28).
"To propose the abolition of central banking is indeed crazy today – just as, say, proposing the abolition of slavery was crazy in 1812, or proposing the abolition of military conscription was crazy in 1952. The dominance of the unexamined premises of too many Right-thinking Serious people in the past suffocated practical efforts to fundamentally reform the way labor was supplied to plantation owners and, later, to the military. Similar unexamined premises today suffocate practical efforts to fundamentally reform the way money is supplied to the economy.
"As Prof. Hubbard surely knows, though, the case for central banking is hardly settled; it continues to be debated by serious scholars. Prof. Hubbard also surely knows that the case for replacing central banking with a more decentralized, privatized, and competitive arrangement is real and rests on significant theoretical and historical research published in premier outlets and conducted by economists with impeccable scientific credentials – economists such as Kevin Dowd, Steve Horwitz, Benjamin Klein, Kurt Schuler, George Selgin, Richard Timberlake, Gordon Tullock, Lawrence H. White, Leland Yeager, as well as by the late F.A. Hayek and Vera Smith."
thanks for the leg work libby.
love the title of this post!
Saludos~
love the title of this post!
Saludos~
I think it funny that the Dodd-Frank Bill was intended to protect us from Dodd-Frank behavior.
However, it's not funny that Paul and Kucinich are sidelined and berated by the media and their own parties.
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However, it's not funny that Paul and Kucinich are sidelined and berated by the media and their own parties.
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