The Fed Audit

Swills · Oct 19, 2011

The Fed Audit - Newsroom: Bernie Sanders - U.S. Senator for Vermont

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."
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$16 fuckin trillion in secret bailouts to some of the largest financial institutions and corporations in the United States and throughout the world. So is this the bad news or does it get worse?

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.
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Total disregard for US laws and procedures, mmkay.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.
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I am not surprised. Pissed yes, surprised no but go on....

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.
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There it is, but is there more?

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.
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And now I wanna punch kittens in their cute fuckin faces! HULK SMASH!!

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.
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Holy fuck, common sense, who woulda thought? But that shit gets in the way when you wanna make money.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.
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0 fucking percent? FUCK YOU!

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."
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And now we have Occupy Wallstreet. Who woulda thunk it?

Hey the 18 of Oct was yesterday.. gonna have to do some lookin into that.

To read the GAO report, click here.

And for more recent Too Big Too Fail bullshit,

HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades

This story from Bloomberg just hit the wires this morning. Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.

This means that the investment bank's European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn't get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to "give relief" to the bank holding company, which is under heavy pressure.

This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.

What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.

This is a recipe for Armageddon. Bernanke is absolutely insane. No wonder Geithner has been hopping all over Europe begging and cajoling leaders to put together a massive bailout of troubled banks. His worst nightmare is Eurozone bank defaults leading to the collapse of the large U.S. banks who have been happily selling default insurance on European banks since the crisis began.
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Lay Low · Oct 19, 2011

[ame=http://www.youtube.com/watch?v=ULEfalVnMJI]SR 24 The Fed's Secret Loans - YouTube[/ame]

trixman22 · Oct 19, 2011

Well its a good thing H. Caine is ahead in the primary polls because according to him there is no need to audit the Fed. If an ex Fed chairman says the Fed doesn't need to be audited he probably knows best. I mean its not like there is a conflict of interest, oh wait he probably got a conflict of interest waiver so its ok.

Norma Stits · Oct 19, 2011

[ame=http://www.youtube.com/watch?v=uiAkeFJXwUk]No Need To Audit the Federal Reserve According to Herman Cain - YouTube[/ame]

xmaspoo · Oct 19, 2011

HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's DerivativesÂ Trades - Home - The Daily Bail

This story from Bloomberg just hit the wires this morning. Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.

This means that the investment bank's European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn't get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to "give relief" to the bank holding company, which is under heavy pressure.

This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.

What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.
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denieddd · Oct 19, 2011

Just read that last paragraph about the taxpayers being on the hook when the European economy tanks and im angered, how the fuck could they do that?

xmaspoo · Oct 19, 2011

denieddd said:

Just read that last paragraph about the taxpayers being on the hook when the European economy tanks and im angered, how the fuck could they do that?
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[ame="http://www.youtube.com/watch?v=ZPWH5TlbloU"]The American Dream By The Provocateur Network - YouTube[/ame]

An entertaining & informative analysis on the Federal Reserve & the Financial Crisis.

lilro · Oct 19, 2011

"No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president,"
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Too bad the Federal Reserve isn't an agency of the U.S. gov't. How convenient.

Lay Low · Oct 19, 2011

lilro said:

Too bad the Federal Reserve isn't an agency of the U.S. gov't. How convenient.
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Not like it matters. They are all in it together. Congress and the president could strip all powers away from the Fed if there was any political will to do so.

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