In what can only be called a 'rare' newspaper column by a Fed Chairman, Ben Bernanke is obviously attempting what I would perceive to be a 'public relations' move on his part before Bernanke testifies before a Senate panel on December 3, 2009 on his renomination to serve a second four-year term as the Secret Big Daddy of the nation's money supply and regulator.
Mr. Bernanke is very 'concerned' that certain people want to strip him of certain powers that he currently holds, and feels that these actions by Congress would be detrimental to the so-called-independence of the Federal Reserve.
Well, it would be one thing if the Federal Reserve were in fact an independent organization, but that simply is not the case. And if I've learned anything from this recent and devastating financial meltdown and 'Great Heist of 2008' it is that I've come to believe that the Federal Reserve has never been an 'independent' organization from day one. And I believe that this is a 'truth' that has become a stark reality for Main Street in our country.
"The Federal Reserve, like other regulators around the world, did not do all that it could have to constrain excessive risk-taking in the financial sector in the period leading up to the crisis," he said.
(Ben Bernanke Quote) November 27, 2009
Oh, really Ben? You did not do 'all' that you could do to 'constrain excessive risk-taking' in the greatest clusterfuck meltdown of the history of our nation?
Well, Ben, tell you truth, what you did was, you and your staff, your pals on Wall Street and the Banks screwed the pooch so badly, that we had to bury in the back yard. Take a look around you Ben, cause the 15.5 million people that have lost their jobs, their homes, their retirement and pension incomes and life savings are not exactly feeling all warm and fuzzy about your 'fake apology.'
First up, can we please finally stop 'pretending' the Federal Reserve is 'independent' and that their mission and actual mandate for being responsible as one of nation's top watchdogs and regulators, and their responsibility for pursuing price stability and maximum employment hasn't exactly 'done the job'?
I can best describe my own feelings of the 'independence of the Fed' as pointing in this direction from Tim Dury's Fed Watch:
Over the years, I have warned a seemingly countless number of undergraduates that Fed's hold on monetary independence was tenuous at best. Independence is not guaranteed by the Constitution. Congress made the Fed, and Congress can unmake the Fed. The Fed could only maintain the privilege of independence if policymakers pursued policy paths that fostered maximum, sustainable growth. Deviating from such paths would have consequences. The Fed is quickly learning the extent of those consequences, as Congress launches an assault on the Fed's independence.
The Fed earns accolades from academics for its handling of the crisis, in particular since the Lehman failure. Fair enough; I have few quibbles with policy since last fall. But what about the years before Lehman, when the crisis was building? Where was the Fed then? Did they abdicate regulatory responsibility? How did banks develop such incredible exposure to off-balance sheet SIV's? How could the Fed ignore increasingly predatory lending in the mortgage market? What exactly was Timothy Geithner, then president of the all important New York Fed, regulating and supervising? Clearly not Citibank. To be sure, there were plenty of other regulatory failures along the way, but the Fed - an independent Fed - should have been in a much better position to raise regulatory and supervisory roadblocks during the debt build-up compared to other, more politically susceptible agencies. The Fed's independence should have allowed it to be a leader, not a follower. Ideological objections to regulation, apparently, prevented the Fed from looking for problems in their own backyard. Rapid debt creation was justified as a response to asset appreciation, with little concern that the connection might just be a bit more self-reinforcing.
But that mission creep was simply incompatible with the Fed's desire for secrecy. This was all to predictable: Like it or not, you cannot commit literally billions of dollars of taxpayer money and in the process secretly funnel money through AIG to the investment banking community without expecting just a little blowback. The last I checked, this was still a democracy. Worse now for the Fed is the impression that monetary authorities work first and foremost for Wall Street. Of course, Fed officials see this a bit differently - they see supporting Wall Street as their mechanism for supporting Main Street. Ultimately, without the former, the latter is locked out of capital markets, and economic chaos follows. The purpose of Wall Street is supposed to be to channel investment funds into Main Street. But most Americans no longer view Wall Street as ultimately working in their best interests - maybe correctly. This is the same Wall Street that aggressively pushed garbage loans onto the American people as policymakers praised the wonders of financial innovation. When did the purpose of finance evolve into simply a mechanism to enrich the relative few at the expense of many? And when did policymakers embrace this view? As Paul Krugman has noted, the Fed cannot envision a world not dominated by the magic of structured finance. Yet this is a world that failed us completely. Ultimately, can you really blame Americans if they have lost their faith in the supposedly omnipotent Federal Reserve?
http://economistsview.typepad.com/...
This one sentence needs to be repeated:
Of course, Fed officials see this a bit differently - they see supporting Wall Street as their mechanism for supporting Main Street. Ultimately, without the former, the latter is locked out of capital markets, and economic chaos follows.
Because that is exactly what has happened, make no mistake about it: Complete and utter economic chaos. Lives have been destroyed, families are living in tents for god sake, and retirees have lost their pensions and life savings!!!
And that is a direct result of our financial sectors, and the regulators, most especially Ben Bernanke (and Alan Greenspan) within the very system of the Federal Reserve itself, have wrought with their continued failure of any kind of decent oversight or regulation, and of the obvious and extreme favoritism given towards Wall Street and the Banks. And this policy is not new, it has been going on for many many years, at the direct expense of Main Street.
Please see the 3 examples of these articles and websites, describing just how long these policies have been in place, and how the 'system,' and Ben Bernanke and his staff continually ignored the warning signs of an impending financial disaster, that many experts were in fact 'screaming bloody murder about' at the top of their lungs:
As Subprime Lending Crisis Unfolded, Watchdog Fed Didn't Bother Barking
http://www.washingtonpost.com/...
The On Going Cover Up of the Truth Behind the Financial Crisis May Lead To Another Crash
http://www.nakedcapitalism.com/...
Sold Out: How Wall Street and Washington Betrayed America
http://www.stwr.org/...
Lawmakers are angry with the Fed over its emergency bailouts of major financial firms and its failure to prevent the contagion of mortgage delinquencies that crashed the financial system. A proposal to audit the Fed's monetary policy deliberations won a committee vote recently over the objections of House Financial Services Committee Chairman Barney Frank. Frank's Senate counterpart, Banking Committee Chairman Christopher Dodd, is himself the author of a proposal to consign the Fed solely to making decisions about setting benchmark interest rates.
Bernanke, in his column, conceded the Fed had missed some of the riskiest behavior in the lead up to the crisis. But he said the Fed had helped avoid an even more damaging economic meltdown and has stepped up its policing of the financial system.
"The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution's ability to foster financial stability and to promote economic recovery without inflation," he said. Bernanke acknowledged that lawmakers are responding to public anger over the government's response to the turmoil.
http://www.washingtonpost.com/...
Let's see what does that mean? "The Fed played a major part in arresting the crisis," and we should be seeking to preserve you Ben and the Federal Reserve?
So what? Let's let 'bygone be bygones' because you think you actually did a great little 'mop up job' after 'looking the other way' for years and years, while Wall Street was making billions and the Banks were all making a killing on all of the 'controlled fraud' and 'liar loans'?
In the article Bernanke really gets his underwear all up in a bunch about the proposed Congressional changes that are being formulated to some of the current powers away from the FED.
The proposed measures are at least in part the product of public anger over the financial crisis and the government's response, particularly the rescues of some individual financial firms. The government's actions to avoid financial collapse last fall -- as distasteful and unfair as some undoubtedly were -- were unfortunately necessary to prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society. (I know something about this, having spent my career prior to public service studying these issues.) My colleagues at the Federal Reserve and I were determined not to allow that to happen.
Well, Ben you and your 'colleagues may have been determined not to have a 'economic catastrophe and another great depression' but I've got news for you Ben, that is exactly what has happened. I guess you didn't get the 'memo'. You really need to stop smoking all those 'green shoots' Benny Boy, that shit will make you delusional.
But let's take a stroll down memory lane for a second and talk about those 'distasteful and unfair rescues of some individual financial firms'.
One of my favorite and highly respected economists, Robert Kuttner had this to say at the time:
The deal proposed by Paulson is nothing short of outrageous. It includes no oversight of his own closed-door operations. It merely gives congressional blessing and funding to what he has already been doing, ad hoc. He plans to retain Wall Street firms as advisors to decide just how to cut deals to value and mop up Wall Street's dubious paper. There are to be no limits on executive compensation for the firms that get relief, and no equity share for the government in exchange for this massive infusion of capital. Both Obama and McCain have opposed the provision denying any judicial review of decisions made by Paulson -- a provision that evokes the Bush administration's suspension of normal constitutional safeguards in its conduct of foreign policy and national security. [...]
The differences between this proposed bailout and the three closest historical equivalents are immense. When the Reconstruction Finance Corporation of the 1930s pumped a total of $35 billion into U.S. corporations and financial institutions, there was close government supervision and quid pro quos at every step of the way. Much of the time, the RFC became a preferred shareholder, and often appointed board members. The Home Owners Loan Corporation, which eventually refinanced one in five mortgage loans, did not operate to bail out banks but to save homeowners. And the Resolution Trust Corporation of the 1980s, created to mop up the damage of the first speculative mortgage meltdown, the S&L collapse, did not pump in money to rescue bad investments; it sorted out good assets from bad after the fact, and made sure to purge bad executives as well as bad loans. And all three of these historic cases of public recapitalization were done without suspending judicial review.
If Paulson had proposed such a deal in his old job as CEO of Goldman Sachs -- putting $700 billion of the firm's capital at risk in exchange for junk bonds of unknown value -- he would have been fired in short order. But this is merely taxpayer money.
http://www.prospect.org/...
Yeah, I mean who gives a shit? It was just 'taxpayer money'...
And isn't strange, this is exactly what ended up happening. Wall Street got the 'Rolls Royce' treatment, and Main Street got kicked into the gutter.' And as Kuttner points out, there were other historical plans of action that had been used that had in fact, 'close government supervision and quid pro quos at every step of the way.' As he states: the Homes Owners Loan Corporation 'did not operate to bail out banks, but to save homeowners'...and the Resolution Trust Corporation of the 80s, did not pump money in to rescue bad investments, it sorted out the bad from the good and it purged bad executives as well as bad loans.'
So, Mr. Bernanke, there were in fact historical precedents that were in fact used, that certainly could and should have been used, and I wonder why they have not been used, and so do many other people. But then, that has come out very clearly in the past year or so, and people are very aware what this entire fiasco was really all about. It was a 'Heist' pure and simple:
Fluke? Credit crisis was a heist
Thanks to a complicit Congress, the reins were systematically loosened on the looters of the financial industry. And they're still at it, looking for new plunder.
By Jim Jubak
It was no accident.
The folks in power in Washington and on Wall Street want to pretend that the current global financial crisis -- you know, the one that reduced household net worth in the United States by $11.2 trillion in 2008, according to the Federal Reserve -- was an accident caused by some unfortunate confluence of greed and asleep-at-the-switch regulators.
What we're now living through, though, is the result of a conscious, planned looting of the world economy. Its roots stretch back decades. And it wouldn't have been possible without the contrivances of the bought-and-paid-for folks who sit in Congress.
Of course, just because the plan blew up on the looters, taking off a financial finger here and a portfolio hand there, you shouldn't have any illusion that they've retired. In fact, in the "solutions" now being proposed -- by Congress -- to fix the global and U.S. financial systems, you can see the looters at work as hard as ever.
http://articles.moneycentral.msn.com...
Yes, above all Mr. Jubak, I thank you for reminding all of us to remember to not have any 'illusions' that these crooks and liars are resting on their laurels and are simply planning on who to give more money to in our Whorish Congress Club to continue their looting and getting their own pieces of the pie so that Wall Street and Mr. Bernanke can continue on with all of the good old 'Independence' thingie that Ben likes to talk about.
Mr. Bernanke goes on in his column to assure us that 'this time' things are going to be different and he's making all kinds of 'big plans' to be strict and promises that we can rest assure that he has all of our 'best interests at heart.' He then goes on to let us know what a 'bang up job he's done and why it is so important for us to keep the system of the Federal Reserve in place:
There is a strong case for a continued role for the Federal Reserve in bank supervision. Because of our role in making monetary policy, the Fed brings unparalleled economic and financial expertise to its oversight of banks, as demonstrated by the success of the stress tests.
Of course, the ultimate goal of all our efforts is to restore and sustain economic prosperity. To support economic growth, the Fed has cut interest rates aggressively and provided further stimulus through lending and asset-purchase programs. Our ability to take such actions without engendering sharp increases in inflation depends heavily on our credibility and independence from short-term political pressures. Many studies have shown that countries whose central banks make monetary policy independently of such political influence have better economic performance, including lower inflation and interest rates.
Independent does not mean unaccountable. In its making of monetary policy, the Fed is highly transparent, providing detailed minutes of policy meetings and regular testimony before Congress, among other information. Our financial statements are public and audited by an outside accounting firm; we publish our balance sheet weekly; and we provide monthly reports with extensive information on all the temporary lending facilities developed during the crisis. Congress, through the Government Accountability Office, can and does audit all parts of our operations except for the monetary policy deliberations and actions covered by the 1978 exemption. The general repeal of that exemption would serve only to increase the perceived influence of Congress on monetary policy decisions, which would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation.
w.washingtonpost.com/wp-dyn/content/article/2009/11/27/AR2009112702322.html?nav=rss_business/industr
ies
Banging my head on the table....
You mean the 'fake bank stress tests Ben?'
The worst-kept secret in Washington and on Wall Street is upon us--the release of the government's bank stress test results Thursday. Regardless of the outcome, their job is already done.
The tortured process amounts to nothing more than a huge--and purposeful--distraction, diverting attention from the government's behind-the-scenes efforts to help banks earn their way out of trouble through old fashioned profit-taking on ever-widening interest rate spreads.
Article Controls
It's just "stall tactics," says Simon Johnson, an economics professor at MIT's Sloan School of Management. Regulators' "whole strategy is 'wait and see,' to buy time for the economy to recover." By guaranteeing debt banks sell to help fund their lending operations, the Federal Deposit Insurance Corp. lowered the cost of borrowing for banks, boosting the profit margin from lending out at higher rates. At a certain point, banks will be able to overcome more than a year of losses from deteriorating assets with strong revenues and profits from traditional banking activity.
http://www.forbes.com/...
Yeah, yeah yea Ben, 'credibility and independence' blah, blah, blah....I got it....
Except for what Ben? What was that again?
except for the monetary policy deliberations and actions covered by the 1978 exemption.
Is that 'code' for all the trillions and trillions of dollars you've lent out to 'god knows who' the past few years and refuse to tell anyone about? Is that the 'only little exemption' you want to hold on to? You mean these exemptions Ben?
The Government Accounting Office does not have complete access to all aspects of the Federal Reserve System. The law excludes the following areas from GAO inspections (31 USCA §714):
Amends the Accounting and Auditing Act of 1950 to authorize the General Accounting Office (GAO) to conduct independent audits of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.
Prohibits the GAO from auditing:
(1) transactions conducted on behalf of or with foreign central banks, foreign governments, and nonprivate international financing organizations;
(2) deliberations, decisions, and 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 including transactions of the Federal Reserve System Open Market Account; and
(4) those portions of oral, written, telegraphic, or telephonic discussions and communications among or between Members of the Board of Governors, and officers and employees of the Federal Reserve System which deal with topics listed in this Act.
Prohibits the GAO from conducting on site examinations of banks or bank holding companies without the written consent of the appropriate regulatory agency.
Sets forth prohibitions on the public disclosure of certain information.
Imposes a fine of up to $5,000 and/or one year imprisonment for disclosure of information from a bank examination report by a GAO auditor.
http://thomas.loc.gov/...
Well, shit Ben, thats a really long list of 'exemptions' that the GAO is prohibited from auditing or knowing anything about. How is the Senate, the House, or even the President - let alone the American taxpayers suppose to be able to 'judge' your performance if we can't actually, you know, see the numbers, ask any questions, evaluate your 'Godly hands on our nations financial wallet'? Are we just suppose to 'trust' you without any evidence, or should we just continue to have faith in you based on your past performance or say, the last few years?
Transparency? Accountability? Is that what Mr. Bernanke is actually asking us to believe in his 'zippy' little 'public relations' article written prior to his reconfirmation hearing?
For many Americans, the financial crisis, and the recession it spawned, have been devastating -- jobs, homes, savings lost. Understandably, many people are calling for change. Yet change needs to be about creating a system that works better, not just differently. As a nation, our challenge is to design a system of financial oversight that will embody the lessons of the past two years and provide a robust framework for preventing future crises and the economic damage they cause.
http://www.washingtonpost.com/...
Understandably, Mr. Bernanke?
What I fail to understand and what millions of Americans fail to understand is how you and others in the financial sectors of our nation could even 'pretend' that you gave a damn about Main Street in the first place, and how you have the temerity to even 'pretend' that you were conducting critical oversight and regulations of Wall Street and the Banks and let this catastrophe occur.
The truth is Mr. Bernanke, this devastation could last for many, many years to come in our nation and throughout the entire world, and your 'fake apology' sir, is not accepted.