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The Cat Senator Sanders Let Out of the Bag

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The Cat Senator Sanders Let Out of the Bag

Post by Dazed&Confused on Mon Jul 25, 2011 3:51 pm

Big Surprises Uncovered in Fed Audit

Written on July 25, 2011 by Ann-Marie Murrell

The Federal Reserve has recently had a complete audit and according to Vermont Senator Bernie Sander’s website, one of the big surprises found was the fact that the “U.S. provided $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression.”

Senator Sanders created an amendment to the Wall Street reform law a year ago which directed the

Government Accountability Office to conduct the audit.

“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.”

Included in the audit findings, the Fed provided trillions of dollars in financial aid from South Korea to Scotland.

“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.

The audit also discovered that the Fed “lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse” and provides “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.”

An example Senator Sanders gives is that the CEO of JP Morgan Chase served on the New York Fed’s board of directors “at the same time his bank received more than $390 billion in financial assistance from the Fed.” Also, JP Morgan Chase “served as one of the clearing banks for the Fed’s emergency lending programs.”

Another “surprise” discovered in the audit is that, according to the GAO report, on Sept. 19, 2008, William Dudley, president of the New York Fed, was given a waiver allowing him to keep his investments in AIG and General Electric “at the same time AIG and GE were given bailout funds”. According to the audit, one of the reasons Dudley didn’t have to sell his holdings is because it might have “created the appearance of a conflict of interest.”

“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,” Sanders said.

Other information revealed by the audit is 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,” Senator Sanders posted on his writes. “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.”

Another more detailed GAO investigation into potential conflicts of interest at the Fed is due on October 18.

As Sanders says, “The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street.”

To read the GAO report, click here.

It is interesting to me that when Senator Sanders gave his 8 hour filibuster last year, he mentioned this but no press. He said he would confirm it, now we have press

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Re: The Cat Senator Sanders Let Out of the Bag

Post by lendmeflight2 on Mon Jul 25, 2011 4:35 pm

I am really stunned. All I can say is that this had better have happened in 2008. The report implies that it did but doesn't explicitly say so.

If not and the debt deal gives anything away then Obama needs to be face a primary challenger. I have had enough.

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Re: The Cat Senator Sanders Let Out of the Bag

Post by Dazed&Confused on Mon Jul 25, 2011 4:46 pm

Yes, Lendme, I think it was 2008 or 2009. Probably over a period within those years.

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Re: The Cat Senator Sanders Let Out of the Bag

Post by sbraney on Mon Jul 25, 2011 5:31 pm

I can't remember who it was that said this, but just after the FED's audit revealed that the U.S. taxpayer had provided trillions to bail out foreign private banks and corporations, the gov't person said, "well, we're now in a global economy, where many investors are located outside the U.S., so our FDIC rules protect their investments too." What blows my drawers off is that we've increased the deposit insurance from $100,000/deposit to $250,000. Sheila Bair, the former FDIC chairperson has apparently been singing like a canary since she left office. We need to round up the Wall Street criminals and charge them with treason. Summers, Rubin, et al., are doing to the U.S. what they did in the 90s to Russia - trying to privatize everything - sell it off at firesale prices, and create a monstrous plutocracy. Both parties talk about our federal lands - someone said that it isn't that far off to suggest that one day, the Ahwahnee hotel could belong to the Koch brothers - or maybe they'd rather live in the Wawona hotel or both.

Also, came across this article about the FED - notice that it was written last year at this time - keep in mind too that Congress has not done anything to repeal the tax incentive to corporations that outsource jobs.

What Can the Fed Do?

Ending the subsidy to banks for not lending would help

By BRUCE BARTLETT, The Fiscal Times
July 23, 2010
This week, Federal Reserve Board chairman Ben Bernanke testified before Congress that the Fed is prepared to take additional actions to stimulate the economy in the event that growth falters. Unfortunately, the Fed does not yet appear to be considering an end to its ill-advised policy of paying interest on excess reserves at banks, which is in effect a subsidy to them for not lending.


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Re: The Cat Senator Sanders Let Out of the Bag

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