Friday, May 7, 2010

Plan To Audit Federal Reserve Thwarted By Obama Administration

Chalk one up for our wonderful Congress and President!  Possibly the most important piece of legislation on the docket and one supported overwhelmingly by the populace just "withered on the vine".  Time to pop those champagne corks, ladies and gentlemen of  Washington, your need to obfuscate has once again taken precedence over the rights of the American people to understand what is being done with THEIR money!

Of course, we have to allow for the fact that politicians view tax collections as belonging to THEM.  They don't!  The Federal Reserve (Fed), so expert at creating asset bubbles, then justifying their existence by rushing in to fix those bubbles, remains shielded from any oversight.  What's a few trillion among friends?

Political pressure from the Obama administration, along with the Treasury and Fed, led Senate lawmakers to alter a provision pushed by Sen. Bernie Sanders (I., Vt.) that was gaining momentum.  It would have largely repealed a 32-year-old law that shields Fed monetary policy from congressional auditors.

Sen. Sanders, after the intense lobbying by the Obama administration and Fed officials, removed language in his amendment to the financial-regulation overhaul that would’ve opened the Fed’s monetary policy deliberations to audits by the congressional Government Accountability Office (GAO).  The original Sanders amendment eliminated those restrictions, which were passed by the Senate in 1978.  The bill prevented the GAO from reviewing the Fed’s monetary policy actions, discount window lending, open market operations and transactions with foreign central banks or governments.

The watered-down Sanders amendment requires a one-time audit of the Fed’s emergency credit facilities and an inspection of Fed governance, a review of the selection of regional bank directors and the operation of regional banks’ lending facilities.  The measure still requires the Fed to publicly identify borrowers from its emergency lending facilities and other special programs by December 1.  But, it doesn’t stipulate ongoing disclosure.  So what good is it?

The compromise, endorsed by Senate Banking Committee Chairman Christopher Dodd (D., Conn.) and the Treasury, would require the Fed to disclose more details about its lending during the financial crisis.  It would also require a one-time audit of those loans and a one-time review of Fed governance.  A formal vote was pushed back until next week.  Its endorsement by the Treasury is proof the bill has ZERO teeth.

"At a time when our entire financial system almost collapsed, we cannot let the Fed operate in secrecy any longer," Mr. Sanders said. "The American people have a right to know."

Fed Chairman Ben Bernanke, while insisting on a commitment to "openness" at the Fed, said in a letter to Congress the original Sanders measure would "seriously threaten monetary policy independence, increase inflation fears and market interest rates and damage economic stability and job creation."  Mr. Bernanke fails to mention in his letter that the Fed itself has caused economic and financial instability and has utterly mismanaged monetary policy and set the level of interest rates to cause the very financial crisis we're in. (Sarcasm intentional!)

A House bill sponsored by Rep. Ron Paul (R., Texas) that passed in December, contains a proposal similar to the original Sanders measure.  If the Senate bill were to pass, it would need to be reconciled in a conference committee.  Given the "compromise" bill, the reconciliation process cannot possibly lead to any legislation that would be effective.

Before the last-minute compromise, the Fed's foes appeared to be winning  and got a major boost when Senate Majority Leader Harry Reid (D., Nev.) said he would side with Mr. Sanders.

At least half a dozen Obama administration officials joined the high-pressure campaign, including Treasury Secretary Timothy Geithner and Rahm Emanuel, the White House chief of staff.  Administration aides credited Mr. Dodd with pushing back against the original amendment and developing an acceptable alternative.

The corrupt wheels of Washington continue to turn.  The fact is that an audit of the Fed is not opposed because it could interfere with the great job they do.  Rather, it is a desperate attempt to hide their utter incompetence and mismanagement, along with their surreptitious market operations designed to interfere with a free market to serve their political masters.

Marko's Take

Our latest You Tube video titled "Social In-Security:  The Problem" is now posted and can be accessed by clicking here  We will post "Social In-Security: The Solution" subsequently.  Stay tuned for a 7 step plan on how to fix this mess.

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