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When Left Meets Right.



July 20, 2010 – Comments (0) | RELATED TICKERS: F , DE , FED

Sanders' Fed transparancy amendment, which is included in the Restoring American Financial Stability Act of 2010 (bill summary here) which has passed both chambers of Congress and been sent to the president, does two things:

First, it requires the Federal Reserve to put on its website by December 1, 2010, the names of all of the financial institutions, corporations, and foreign central banks that received trillions of dollars in taxpayer assistance from the Federal Reserve since the beginning of the recession.

Second, it requires the Government Accountability Office (GAO) to conduct a top to bottom audit of all of the emergency actions the Federal Reserve has taken since the beginning of the financial crisis with a particular focus on all of the potential conflicts of interest surrounding these secret deals...

...Since the beginning of the financial crisis, the Federal Reserve has provided over $2 trillion in zero or near zero interest loans -- backed by American taxpayers -- to the largest financial institutions in this country -- financial institutions that the Fed has deemed "too big to fail".

On March 3, 2009, Sen. Sanders asked Ben Bernanke, the Chairman of the Federal Reserve at a Budget Committee hearing a simple question:

Will you tell the American people who received these taxpayer dollars and will you tell the American people what the exact terms of this unprecedented financial assistance was?

Chairman Bernanke said no, he would not.  He refused to answer this basic question.  On that very same day, Sen. Sanders introduced legislation requiring the Fed to put this information on its website, just like Congress required the Treasury Department to do with respect to the $700 billion TARP program.  And here we are now.

This money does not belong to the Federal Reserve, it belongs to the American people and the American people have a right to know where trillions of their taxpayer dollars are going.  By passing this amendment, we will give the American people this information.

Two federal courts have already ordered the Federal Reserve to release this information as a result of a Freedom of Information Act request filed by Bloomberg News....


...Not only would this amendment require the Fed to disclose these details on its website, this amendment also requires the GAO to complete a comprehensive audit of every single emergency action the Federal Reserve has undertaken since the start of the financial crisis.

Importantly, as a part of this audit, the GAO will be required to investigate whether there were conflicts of interest with respect to all of the Federal Reserve's emergency actions taken since December 1, 2007....  

....Why was Lloyd Blankfein, the CEO of Goldman Sachs invited to the New York Federal Reserve to meet with federal officials in September of 2008 to determine whether AIG would be bailed out or allowed to go bankrupt?  When the Fed and Treasury decided to bailout AIG to the tune of $182 billion, why did the Fed refuse to tell the American people where that money was going?...


In 2008, was there a conflict of interest at the Federal Reserve Bank of New York when Stephen Friedman -- the head of the New York Fed -- who also served on the Board of Directors of Goldman Sachs -- approved Goldman's application to become a bank holding company giving it access to cheap loans from the Federal Reserve?  Here is an article published on May 9, 2009 in the Wall Street Journal that says:

"Goldman Sachs received speedy approval to become a bank holding company in September of 2008 … During that time, the New York Fed's chairman, Stephen Friedman, sat on Goldman's board and had a large holding in Goldman stock, which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy.  The New York Fed asked for a waiver, which, after about 2½ months, the Fed granted. While it was weighing the request, Mr. Friedman bought 37,300 more Goldman shares in December. They've since risen $1.7 million in value.  Mr. Friedman, who once ran Goldman, says none of these events involved any conflicts."...

....When the Federal Reserve provided a $29 billion loan to JP Morgan Chase to acquire Bear Stearns, the CEO of JP Morgan Chase (Jamie Dimon) served on the Board of Directors at the New York Federal Reserve.  Did this represent a conflict of interest?  A GAO audit can help explain this to the American people.

Currently, some 35 members of the Federal Reserve's Board of Directors are executives at private financial institutions which have received nearly $120 billion in TARP funds, but we don’t know how much these big banks received from the Fed.  A GAO audit could answer this question.  Which of these institutions got what when, on what basis, on what terms, who attended the meetings, who made the decisions and were there conflicts of interest?  That's what this amendment is all about. 

This bill is only a first step in the right direction but the question I have is: Do I really want to know, if the banksters aren't punished and if nothing gets changed?'.

(by punished I mean impoverished) (by changed I mean acedemia or career politicians, or lifetime appointments like the Supreme Court, in charge of a more transparent Fed, no Goldman Sachs, or JPM employees for the next twenty five years. At least).

Enjoy the Song.

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