Bernanke reappointed by Obama

Joined: 26 Aug 2008 Posts: 269

http://news.yahoo.com/s/ap/20090825/ap_on_go_pr_wh/us_bernanke

I can't decide if I like this or not. I like that Bernanke came from outside of the typical Goldman Sachs stock, but he has no real world experience. His entire career has basically been spent in academics and government.

I am happy that what most thought would come to pass in fact did not, that is Larry Summers being appointed to the position.

Kind of off topic, but I recall not too long ago a little arguement about the Federal Reserve with someone here, and whether or not they are part of the Federal Government....

http://www.retail-worker.com/forum/posting.php?mode=quote&p=103530

Joined: 22 Dec 2007 Posts: 445

"Umm...It's boards of governors are appointed by the president and confirmed by the senate. The Ferderal Reserve is subject to Congressional authority and oversight."

True to a point however they never bothered to audit the fed...but we are getting extreamly close.

"Show me how many notes aren't signed by the Treasurer of the United States and by The Secretary of the Treasury? How many aren't stamped by the Secretary of the Treasury? The Federal Reserve is most certainly a part of Government."

Putting a stamp on something doesn't exactly mean it's part of the government. If the president signs a bill it doesn't mean he or she wrote it.

"List of Independant government agencies http://en.wikipedia.org/wiki/Independent_agencies_of_the_United_States_government Notice the word "government" al over the place. "

Well yes and no...take a look at this article
http://en.wikipedia.org/wiki/Federal_Reserve_System
It's enough to give you a headache as to how this operates.
They are exempt from FOIA...why?
In the 30's there was arguments with the DC government because they couldn't prove to them that they were part of the government (they were going to get charged property taxes...this is detailed in the book The Secrets of the Temple by William Greider

If it is part of the government it has to fall under one or more of the three branches of government. Can the president fire the Chairman of the federal reserve? Some say Reagan pressured volker in the 80's to quit but there was not a outright firing (which is why this bernanke thing is straight bs)
Can congress fire or replace the head of the federal reserve? nope
Is congress notified as to the meetings of the reserve (no...it is secret until the minutes comes out). the president isn't even allowed to go to the meetings. These aren't televised either or recorded (outside of the minutes)

If it is part of the government all the way then we should be able to audit the fed. When Bernanke says he doesn't know where half a trillion went...something is wrong.
http://www.youtube.com/watch?v=n0NYBTkE1yQ

Read some more of the article...
http://upload.wikimedia.org/wikipedia/commons/7/75/Organiztion_of_the_Federal_Reserve_System.jpg
That looks pretty independent to me.

however
"The Federal Reserve System is an independent government institution that has private aspects. The System is not a private organization and does not operate for the purpose of making a profit"

Reguardless if you agree with me or what you might think about this organization you do have to admit that if it is part of the government they are quite secretive. I have used foia to get information from the NSA, FBI, CIA and military intelligence. I can't use foia on the federal reserve.
http://en.wikipedia.org/wiki/Criticism_of_the_Federal_Reserve

Joined: 22 Dec 2007 Posts: 445

Just to sort of note the writer of the book in question recent put an article in the nation magazine
Dismantling the Temple
http://www.thenation.com/doc/20090803/greider

I should note that the mixing of public and private organizations is not just on the national level but also on the state. In mass there's a number of organizations that neither the governer nor the state congress can really control or modify (mass turnpike authority http://en.wikipedia.org/wiki/Massachusetts_Turnpike the supreme court here even said that the governer couldn't do anything)

This hybrid public private concept is an odd ball of wax. If a company is private ultimatly it can fail and go out of business. If something is a part of government then it has to be open in terms of the operations. To have something funded by government that cannot be controlled by government doesn't jive with me. Funding should be ownership and that should be control.

Joined: 26 Aug 2008 Posts: 269

Taken from the Wiki Article you linked: "The Federal Reserve System is an independent government institution that has private aspects" Note the word "government" there. More :"Since the System was designed to be independent whilst also remaining within the government of the United States" Hmm, that word "government" there again. And "Congressional oversight and statutes, which can alter the Fed's responsibilities and control, allow the government to keep the Federal Reserve System in check." Boggle, there is the word again! Dang, another "As an independent federal government agency"

Your argument was that they are not part of the federal government. All over your post, in the links, are references to the Federal reserve being a independant agency of the Federal Government. You say if the president signs a bill into law it doesn't mean he or she wrote it. Correct, but it sure means it came from the Federal Government, does it not?

Can the president fire a Supreme Court Justice? He sure as heck appoints them, just like the does the Fed Chair. Is the Supreme Court not part of the federal government then?

It's been suggested that the Federal Reserve is in fact the 4th branch of government. It acts just like every other Government agency. Directors are appointed by the president, confirmed by the senate. And the Federal Reserve sure as hell is accountable to the federal government. Read this here, it's from the Fed's it's audit system itself http://www.federalreserve.gov/boarddocs/rptcongress/annual06/pdf/audits.pdf If you don't bother to read it, here's what you are looking for there "Federal Reserve operations are also
subject to review by the Government
Accountability Office" Hmm, the GAO.. wonder who that is? The government itself does not preform the audit, but they most certainly have to present the audit to the GAO.

The Fed isn't completely exempt from FOIA. The request has to fall under certain provisions in order for the Fed to be exempt. Damn man, here is the Fed's own FOIA page. http://www.federalreserve.gov/generalinfo/Foia/default.cfm Still think they are exempt? Holy Schmoley.

What I won't argue is that the Fed isn't run amok. What they are doing right this very moment to the entire Banking industry has, and still is making our economy worse. Banks, still can't loan. The Fed won't let them. What they say publicly goes in direct contrast in what they are requiring of banks right now. The Large banks are derserving of what they got, but they are crippling community banks right now by requiring assinine capital to asset ratios. In fact, they are changing those ratios as they hop bank to bank with thier audits. One bank may be required to have a 10-1 ratio, while the next they audit they decide it needs to be at 13-1. If a bank asks the Fed what ratio they need, the Fed won't tell them, because they don;t know themselves. Auditors are making this crap up as they go.

Banks are looking for any way possible to shed whatever loans they can (loans are a banks biggest asset). They are't issuing new loans because it adversly affects thier ratio. The result is business are closing, people are getting laid off, and no new businesses are opening. Until banks are able to start lending, no amount of stimulus matters.

Joined: 06 Jul 2003 Posts: 8212 Location: Central CA

Joined: 22 Dec 2007 Posts: 445

"You say if the president signs a bill into law it doesn't mean he or she wrote it. Correct, but it sure means it came from the Federal Government, does it not?"
yes but that doesn't mean that the president had anything to do with it

"Can the president fire a Supreme Court Justice? He sure as heck appoints them, just like the does the Fed Chair. Is the Supreme Court not part of the federal government then?"

But the supreme court congress can fire one of them via impeachment. As of yet I don't see that with the federal reserve.

"It's been suggested that the Federal Reserve is in fact the 4th branch of government. It acts just like every other Government agency. Directors are appointed by the president, confirmed by the senate. And the Federal Reserve sure as hell is accountable to the federal government."

I doubt that it's really accountible given the levels of debt we have. In the article I referenced it clearly shows they just print up the money. Read at least some of the nation article (I know it's long)

"Read this here, it's from the Fed's it's audit system itself http://www.federalreserve.gov/boarddocs/rptcongress/annual06/pdf/audits.pdf If you don't bother to read it, here's what you are looking for there "Federal Reserve operations are also subject to review by the Government
Accountability Office" Hmm, the GAO.. wonder who that is? The government itself does not preform the audit, but they most certainly have to present the audit to the GAO"

But yet that is refuted here
www.americanbankingnews.com/2009/08/23/what-would-be-involved-in-an-audit-of-the-federal-reserve-part-three/

Here's the bill as written in the 70's where the GAO actually said they don't have the power to audit the fed
http://archive.gao.gov/f1102a/100319.pdf

also read this
http://www.forbes.com/2009/05/15/audit-the-fed-opinions-contributors-ron-paul.html

So to me this is saying the fed is lying! The government can lie you know. Bernake said two years ago that the subprime problems were contained. Obama said in a plan that they didn't expect unemployment to get past 8%.

Banks are the highest margin business in the country and probably the whole world. More than energy, more than healthcare, more than education, more than food. People get charged money to get money.

I should note that congress has the power to regulate the money supply as well as regulate trade. However if you look at what congress can do they really haven't been doing much in the past 95 or so years. Congress declares war..but yet korea, vietnam, gulf etc none were declarations. Congress needs to take power back from the president, the fed the wto etc.

Joined: 26 Aug 2008 Posts: 269

I work in the banking industry now, and dealt with TARP, Federal regulators and the like on a smaller level than what the mega banks like BoA did or are doing.

Here's basically what happend as IS currently happening.

First, we all know basically who got the TARP funds, and how they got them (all of us except possibly Dovell Wink

)

How it worked. The Treasury supplied the Federal reserve with the funds, autorized thier release. These funds were intended to be put back into the economy via loan extensions and new loans. Get peole purchasing again.

In a nutshell what happened, and still is happening, is the Federal Reserve began imposing new, stricter capital to asset ratios on banks. Bank capital consists basically of on-hand cash. It is typically in the form of deposit accounts and stock value. Bank assets consists mainly in the form of a banks loan portfolio. The rest are things like property, etc.

Previously the basic ratio the fed required was a 5-1 capital to asset ratio for a bank to be considered "healthy" Almost immediately after TARP was announced, the Fed, during thier bank audits, started imposing ratios that were double what was previously required. Ratios of 10-1, and sometimes up to 15-1. There isn't any rhyme or reason to the ratio they require of each bank. When you ask the fed themselves, they can't answer as to what your ratio for your bank will need to be, or why it needs to be what they set for you.

The bailed out banks were running at frikkin negative ratios. THey were so wrapped up into sub-prime lending and credit default swaps, they has pissed away all of the available cash they had to gamble it in the defaul-swap market. When the bell tolled, they were all ass backwards ratio wise.

That left, and still leaves, two options for banks. Option 1 is increase thier capital. Almost impossible in the current market. Anyone want to purchase some nice shiny new bank shares? Didn't think so Smile

How about opening a new account and trusting us with your money? Sure, right after the banks just pissed the money you had before away? Option 2 is to reduce thier assets. This is the easy one, and the path taken by banks. Loans are a banks largest asset. Solution is simple, shed those existing loans that you can get rid of, and don't take on any new loans. This is what banks are doing.

Ok, to the large banks. They robbed Peter, to pay themsleves. The TARP funds were free, instant capital. BOOM! Capital level increased, now let's lower that pesky asset level. BOOM, now new lending, and those pesky small business owners, let's kick them to the curb. Loans that came to maturity weren't, and aren't getting renewed. I won't even get into the criminal executive bonus crap. we all know about that. This is why many of the large banks that got TARP funds have been able to start paying back those funds.

Contrary to what the talking heads tell you, and what you hear about the economy, home lending itself has VERY little impact on our nations economic health. It in itself is merely a decent INDICATOR of our country's economic health, it's not the driving force. What drives our economy is the small to medium sized business. They are the ones emplying our citizens, providing the benefits (Health Care etc). Unfortunately, they are the ones being left out in the cold by the banks and the fed right now. Until banks are willing to, and in some cases can start lending again to teh small to medium sized business owner, unemployemnt will continue to rise or at best stagnate at current levels, and our economy will continue to dwindle.

These TARP recipient, large conglomorate banks, through thier greed and stupidity, running around basically unchecked (thanks Phil Gramm) got us into this mess. Those banks that got those funds, instead of using them as intended, took the easy way out and saved themselves instead. The Fed right now, isn't helping any either. TARP was the most ill-conceived plan they came up with for a 'stimulus'. The only thing it stimulated was the pocket books of the upper 1% that were in danger of losing thier grip on our economy.

Oh, and Dovell. Like I have posted above, I am in banking. I work in compliance. What this means is that I have to have practical knowledge of banking regulations. This means I deal with actual, real life Federal Reserve regulators. Recently my bank CEO (I work at a small communnity bank) went to DC to speak with the senate banking committee and federal reserve board members. I had to go over those reports that were brought back. I know EXACTLY how the Federal Reserve works. I have to, or I am looking for work elsewhere. For every link you have to try and prove that the Federal Reserve is not part of the Federal Government, I have 10 links that say otherwise, coupled with 10 more personaly experience story's where I deal first hand with them. The Federal Reserve is a mess, but it most certainly is, in fact, a government agency.

Oh, and ONE last thing. You didn't read my post, of the link to the Federal Reserve audit did you? The GAO has no authority to conduct a audit themsleves of the Federal Reserve. The Federal Reserve though MUST be audited, and that audit MUST be presented to the GAO for review. All that Paul wanted was for the GAO to be able to conduct the audit itself. That's it. That audit that MUST be done though MUST be presented to the GAO for review.

Want to argue still whether or not that the Federal Reserve is exempt from FOIA? Smile

Joined: 22 Dec 2007 Posts: 445

Fair enough although you do have to admit that this is intersting
http://www.corbettreport.com/articles/20090825_geithner_audit.htm

Geithner says that auditing the fed is "a line we don't want to cross"

If congress takes enough of a stand against the fed they have to open up.

The federal reserve also LOST a lawsuit
http://www.reuters.com/article/ousiv/idUSTRE57O03P20090825

"NEW YORK (Reuters) - A federal judge on Monday ruled against an effort by the U.S. Federal Reserve to block disclosure of companies that participated in and securities covered by a series of emergency funding programs as the global credit crisis began to intensify.

In a 47-page opinion, Chief District Judge Loretta Preska of the federal court in Manhattan said the central bank failed to show that disclosure would cause borrowers in the Federal Reserve System to suffer "imminent competitive harm," by stigmatizing them for using Fed lending programs.

So why would the fed block this foia request then? Why would they not only block it but try to defend the blockage in court?

I'm not doubting your experience in the field but why should there be secrets in banking? To note not all central banks are like this. The ECB has purposed doing meetings a few times a year as live tv events. Not in a room without anything (other than the minutes) recorded.

We should have openness in government not secrets.

"The board essentially speculates on how a borrower might enter a downward spiral of financial instability if its participation in the Federal Reserve lending programs were to be disclosed," she wrote. "Conjecture, without evidence of imminent harm, simply fails to meet the board's burden."

Monday's ruling comes as lawmakers and investors demand greater disclosure in how the government manages a series of programs designed to lift the economy out of its deepest recession in decades.

The case arose when two Bloomberg News reporters submitted requests under the federal Freedom of Information Act (FOIA) about actions the Fed took to shore up the financial system in 2007 and early 2008, including an expansion of lending programs and the sale of Bear Stearns Cos to JPMorgan Chase & Co (JPM.N).

After the Fed resisted the request, Bloomberg sued to compel disclosure.

Preska concluded the Fed "improperly withheld agency records in response to a FOIA request by conducting an inadequate search," she wrote.

FOIA obliges federal agencies to make government documents available to the public, subject to various exemptions.

Bloomberg News and the Fed did not immediately return requests for comment.

The case is: Bloomberg LP v. Board of Governors of the Federal Reserve System, U.S. District Court, Southern District of New York (Manhattan), No. 08-9595."

Joined: 26 Aug 2008 Posts: 269

The Fed is subject to FIOA, there are in certain cases exemptions they can fall under though. If they were not subject to FOIA, agency's like Bloomberg would not have even been able to gotten a case before a judge to have the Fed release certain information, it would have been immediately thrown out if the Fed was 100% exempt. Whether or not whatever information was requested meets the criteria for exemption is up to a judge.

Your story show the Fed is not exempt from FOIA. I don't understand why you argued that they are exempt?

The Treasury does not want to audit the fed because of the backlash that would occur from the governemnt auditing itself. It's no different than the reason state and local govenments hire outside independant auditors all of the time. For a audit to have any real merit, it must be done by a outside agency. At our bank we do internal quarterly audits, but have yearly audits done by a outside agency (we are required to).

Joined: 22 Dec 2007 Posts: 445

Well I think the GAO being non political should be given the powers to audit the fed. Since the GAO is the investigative arm of congress and assuming they can get the power to do so I would not see any problem with the GAO auditing the fed.

Yes I understand that people get appointed to the fed. But it just seems odd to me that neither congress or the presidency or supreme court has the power to raise or lower interest rates which is the basic of any financial policy.

I'm sure you remember the late 70's and early 80's. Interest rates were sky high and more importantly went up and down in a zig zag patter. Ultimatly it is alleged that reagan forced volcker to quit. Greenspan in retrospect was much better because he raised and lowered rates gradually (up until 9/11). Considering the platform of "change" I can't warrent Bernanke staying on (I certainly wouldn't want summers either).

I'll admit the federal reserve has become more open and that's a good thing but it shouldn't stop. Why should the beige book for example be released all in one day? a gradual report on a weekly basis might be better for the markets than one big one. Openness is a good thing. I live in an area where there are town hall meetings at least once a year (it's not like what you see on tv)

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