What does Rick Perry really want from the Fed?

[scandal 951]

http://money.cnn.com/2011/08/17/news/economy/rick_perry_federal_reserve/

What does Rick Perry really want from the Fed?

By Annalyn Censky @CNNMoney August 17, 2011: 6:48 PM ET

Rick Perry is bashing the Fed and Ben Bernanke.

Republican presidential hopeful Rick Perry has gone on a Bernanke-bashing binge this week and is now demanding the central bank "open their books up."

NEW YORK (CNNMoney) -- Texas Governor Rick Perry has been on a Bernanke-bashing binge this week, demanding on Wednesday that the Federal Reserve "open their books up."

That comment comes after Perry said earlier this week that it would be "treasonous" if Chairman Ben Bernanke used Fed policy to stimulate the economy before the election.

But what books exactly does Perry want opened?

The Federal Reserve already publishes its balance sheet online every Thursday for the entire world to see.

Not only that, it is audited regularly. Every year, an external accounting firm audits the financial statements of the Federal Reserve and all 12 of its regional banks. Last year, that firm was Deloitte and Touche, but PricewaterhouseCoopers and KPMG have also done it over the years.

Those financial statements are also posted online.

"Every aspect of the Fed's financial dealings are wide open -- wide open," Bernanke remarked at the National Press Club earlier this year. "There is no sense in which the Fed has secret financial dealings."

Despite that public information, anti-Fed criticism seems to be the latest craze on the Republican campaign trail. On Tuesday, Rep. Michelle Bachmann criticized the Federal Reserve for not being "subject to transparency."

Those comments echo similar sentiments from Rep. Ron Paul, a renowned Fed critic in his own right, who over the years has repeatedly called for audits of the central bank and even a review of all the gold in Fort Knox. Paul introduced a bill in the House earlier this year, called the "Federal Reserve Transparency Act of 2011."

Earlier this year, Bernanke said he remains committed to transparency, and in an unprecedented move, he began hosting press conferences four times a year, so he could verbally clarify the reasoning behind the Fed's monetary policy decisions.

He has even responded specifically to the calls for an audit, taking issue with his critics' use of the term.

"Now, what 'audit the Fed' means in the language that has been used by some members of Congress, is not about the financials of the Fed," Bernanke said in February. "Rather, it's about, quote, auditing monetary policy," meaning Congress would evaluate the central bank's decisions.

"I think this is very much different from what most people think about, when they think about an audit," he said.

Congress already has some ability to examine the Fed through its own investigative arm, the Government Accountability Office.

In fact, the GAO's most recent report, released in July, investigated the Fed's emergency-lending programs spanning from December 2007 until July 2010.

The Fed also provides insight into its private policymaking meetings, by releasing those minutes to the public, with a three-week lag. After a five-year period, the Fed also releases a verbatim transcript of the proceedings.

Those lags are important economists argue, because Fed officials need to be able to have a free debate amongst themselves, without worrying that their comments may send the wrong signals to financial markets.

Mark Vitner, senior economist with Wells Fargo, points out that if the Fed became too transparent, investors could front-run the central bank in the stock and bond markets.

"I do think the Fed is being transparent, but they cannot become too transparent," Vitner said. "It's in our nation's best interest to have a strong, effective, independent central bank, and that requires some discretion in certain circumstances."

"When people call for clarity, I think the clarity they want is not feasible," he said.

[luckytxn 2,265]

Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts

Posted by Paul Krugman on July 21st, 2011The first ever GAO(Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out. Ben Bernanke(pictured to the left), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning: http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious — the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.

“This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.” – Bernie Sanders(I-VT)

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows..

Citigroup: $2.5 trillion ($2,500,000,000,000)

Morgan Stanley: $2.04 trillion ($2,040,000,000,000)

Merrill Lynch: $1.949 trillion ($1,949,000,000,000)

Bank of America: $1.344 trillion ($1,344,000,000,000)

Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)

Bear Sterns: $853 billion ($853,000,000,000)

Goldman Sachs: $814 billion ($814,000,000,000)

Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)

JP Morgan Chase: $391 billion ($391,000,000,000)

Deutsche Bank (Germany): $354 billion ($354,000,000,000)

UBS (Switzerland): $287 billion ($287,000,000,000)

Credit Suisse (Switzerland): $262 billion ($262,000,000,000)

Lehman Brothers: $183 billion ($183,000,000,000)

Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)

BNP Paribas (France): $175 billion ($175,000,000,000)

and many many more including banks in Belgium of all places

View the 266-page GAO audit of the Federal Reserve(July 21st, 2011):http://www.scribd.com/doc/60553686/GAO-Fed-Investigation

Source: http://www.gao.gov/products/GAO-11-696

[Ban Hammer 13,492]

[luckytxn 2,265]

It's just money.

[Mr. Big Dog 10,747]

It's just money.

It's a bunch of bunk, is what it is. These $16TN are calculated quite interestingly. Krugman points to pg. 131 of the GAO report where you will indeed find this incredibly large loan amount of $16TN. However, the figures shown are aggregates. What that means is explained right above that very table.

Table 8 aggregates total dollar transaction amounts by adding the total dollar amount of all loans but does not adjust these amounts to reflect differences across programs in the term over which loans were outstanding. For example, an overnight PDCF loan of $10 billion that was renewed daily at the same level for 30 business days would result in an aggregate amount borrowed of $300 billion although the institution, in effect, borrowed only $10 billion over 30days. In contrast, a TAF loan of $10 billion extended over a 1-month period would appear as $10 billion. As a result, the total transaction amounts shown in table 8 for PDCF are not directly comparable to the total transaction amounts shown for TAF and other programs that made loans for periods longer than overnight.

It's useful to understand data presented before commenting on it. Unsurprisingly, Morgan Stanley, for example, is shown to have drawn close $2TN in overnight PDCF loans when the actual loan amount under the PDCF program for Morgan Stanley was actually $8BN. That $8BN had to be secured with eligible collateral and repaid. And that it was.

Don't get me wrong, there are some troubling findings in that audit. Conflicts of interest first and foremost. The suggestion that $16TN were just pizzed out the window is ridiculous, however.

[Zero Sum 305]

Reading is key.