As I noted on Blogtalk a couple of weeks ago, Representative Watt is doing his level best to derail the "Audit The Fed" bill and amendments introduced by Representatives Grayson and Paul.
Representative Watt’s "alternative", however, doesn’t open The Fed’s books – it further snaps them shut! It not only leaves all the existing restrictions against an audit in place and refuses to mandate audits it also places four new restrictions on any such audit activity.
The most outrageous new restriction is that an audit, under Watt’s proposal, may not examine the loans or liquidity arrangements that The Fed enters into or the impact of those deals on the reserves, balance sheet or financial condition of either a Fed-regulated bank or The Federal Reserve itself.
It isn’t hard to figure out why Watt would want such blanket secrecy. One need only look at his heavily-gerrymandered district, which happens to contain the corporate headquarters of Bank of America.
The Dishonorable Representative Watt must resign – there have been ridiculous and outrageous claims made in the past, but any representation that his amendment would somehow "open the books of The Fed" is an outrageous lie, and further, it appears to be intentionally designed to protect one of the very "too big to fail" banks that likely has caused The Fed to get in trouble in the first place – Bank of America.
Again, the simple truth boils down to the concept of collateral, or more specificall, lack thereof:
"Pretending [$8 trillion worth of collateral] is worth $2 trillion or even less doesn’t solve our problems, it just delays the agony. It would be like in medicine somebody had cancer, and we treated him with aspirin saying you don’t want the truth and give him real treatment. You have to know the truth and you have to have the real treatment… They are doing everything that caused the bubble before to try to reinflate the bubble but believe me thay are not going to be able to do it this time."
Unfortunately Ron Paul’s cause is for now doomed as the Goldman – Fed – Administration power arrow has the adminsitration at its "rightful" place in the bottom. Who is first and second is not even that relevant, although [one] can likely guess the distribution.
And an observation from Ratigan on why the swap market is kept off exchanges based on banker input: "because if we bring it into the public, we would have to post collateral, and we don’t have any collateral."
The next risk flaring episode is lurking so close, just off in the shadows… We need just one failed auction, and when interest rates explode, the entire $1 quadrillion IR derivatives house of cards will collapse and take everything away with it. America has bet its future on the goodwill of China and the Fed’s proxies: the Primary Dealers. If it does get to the point where Audit The Fed bill actually does get implemented in its non-abridged form, look for some fireworks in the IR world, courtesy of none other than Ben Bernanke. Would Uncle Ben be willing to wipe out the financial system as we know it as a final self-defense measure? Why, of course he would.
Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been “gutted” while moving toward a possible vote in the Democratic-controlled House.
The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today.
“There’s nothing left, it’s been gutted,” he said in a telephone interview. “This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that.”
Paul, a member of the House Financial Services Committee, said Mel Watt, a Democrat from North Carolina, has eliminated “just about everything” while preparing the legislation for formal consideration. Watt is chairman of the panel’s domestic monetary policy and technology subcommittee.
Keith Kelly, a spokesman for Watt, declined to comment and said Watt wasn’t immediately available for an interview. Watt’s district includes Charlotte, headquarters of Bank of America Corp., the biggest U.S. lender.
It is time to get on the phone with everyone in Washington…Congressman and Senators and demand action against the illegal Federal Reserve. Call the Capitol Switchboard 202-224-3121 and speak with everyone you can!
Without a flood of citizen lobbying, they will most likely water down H.R. 1207 into something meaningless, or else ignore it altogether.
The committee Democrats’ central phone number is (202) 225–4247, and the fax is (202) 225-6952. Alternately, and perhaps more effectively, you can politely email some or all of the committee’s most senior Democrat staff directly, as follows:
Committee staff director and chief counsel: Jeanne.Roslanowick@mail.house.gov
Last week I was very pleased that the Financial Services Committee held a hearing on the Federal Reserve Transparency Act, HR 1207. The bill has 295 cosponsors and there is also strong support for the companion bill in the Senate. This hearing was a major step forward in getting the bill passed.
I was pleased that the hearing was well-attended, especially considering that it was held on a Friday at nine o’clock in the morning! I have been talking about the immense, unchecked power of the Federal Reserve for many years, while the attention of Congress was always on other things. It was gratifying to see my colleagues asking probing questions and demonstrating genuine concern about this important issue as well.
The witness testifying in favor of HR 1207 made some very strong points, which was no surprise considering the bill is simply common sense. It was also no surprise that the witness testifying against the bill had no good arguments as to why a full audit should not be conducted promptly. He attempted to make the case that the fed is already sufficiently accountable to Congress and that the current auditing policy is adequate. The fact is that the Fed comes to Congress and talks about only what it wants to talk about, and the GAO audits only what the current laws allow to be audited. The really important things however, are off limits. There are no convincing arguments that it is in the best interests of the American people for anything the Fed does to be off limits.
It has been argued that full disclosure of details of funding facilities like TALF and PDCF that enabled massive bailouts of Wall Street would damage the financial position of those firms and destabilize the economy. In other words, if the American people knew how rotten the books were at those banks and how terribly they messed up, they would never willingly invest in them, and they would fail. Failure is not an option for friends of the Fed. Therefore, the funds must be stolen from the people in the dark of night. This is not how a free country works. This is not how free markets work. That is crony corporatism and instead of being a force for economic stabilization, it totally undermines it.
If the Fed gave its actual arguments against a full audit, they would not have…
The Federal Reserve, under pressure from Congress to be more transparent, is "giving serious consideration" to releasing the names of firms that receive loans from the central bank, a top Fed official said Friday.
At a House hearing, Fed General Counsel Scott Alvarez struck a conciliatory tone when a top lawmaker indicated that he wanted more information revealed about the Fed’s loans.
Asked if the Fed would work with Congress on establishing provisions for disclosure, Mr. Alvarez said, "We’d be happy to work with you on it."
The hearing addressed the implications of a bill from Rep. Ron Paul (R., Texas) that would open more of the central bank’s operations to audits by the Government Accountability Office, the investigative arm of Congress.
The Fed’s monetary-policy operations — such as interest-rate decisions and loans to banks through its discount window — are blocked by law from GAO review. The GAO audits most other central-bank operations, such as bank supervision and consumer regulation.
Top Fed officials strongly oppose repealing the GAO exclusions. They say audits directed by lawmakers would undermine markets’ belief in the Fed’s independence and raise concerns that monetary policy could be influenced by political considerations. "These concerns likely would increase inflation fears and market interest rates and, ultimately, damage economic stability and job creation," Mr. Alvarez said.
Still, several lawmakers pushed back against the Fed’s suggestion that GAO reviews of monetary policy would hinder the Fed’s effectiveness. "How many audits does the GAO perform?" Mr. Paul asked. "In any agencies of government, in the State Department, in the [Defense Department], nobody’s ever charged the GAO for altering policy."
I am speaking this morning in support of HR 1207, the Federal Reserve Transparency Act. As the Committee knows, this bill would require a full audit of the Federal Reserve by the Government Accountability Office (GAO).
On November 10, 2008, Bloomberg News ran the following headline: “Fed Defies Transparency Aim
He is an expert on white-collar crime and former financial regulator. He played a key role in resolving the S&L crisis. Currently he teaches economics and law at UKMC. See his full bio here, his Huffington Post pieces here, and definitely watch his Bill Moyers interview if you haven’t yet.
On to the interview:
#1) Adam: If you were advising President Obama on financial reform, what would your first priority be?
Mr. Black: Containing, and beginning to end, “too big to fail.” Financial institutions that are too big to fail are not, as the administration has rebranded them: “systemically important” — they are systemically dangerous institutions (SDIs). First, they should not be allowed to grow. Second, their managements should be removed if they were mismanaged. Third, they should be shrunk to the point that they no longer endanger the global economy.
#2) Adam: Do you think it is likely that meaningful reforms will be passed under the current administration?
Mr. Black: I think it remains “likely” (i.e., >50% chance), but I think it is only barely likely and I think the odds of meaningful reform are falling. I think the two hopes for fundamental reform under this administration are the new “Pecora commission” which should document the compelling need for change and the fact that the problems at the giant zombie banks are so great that there will be another crisis within the next four years. (I explained this point in more detail in my recent piece in the NYT’s “Room for Debate” on this subject.)
The odds of meaningful reform are substantially higher under President Obama than they were under President Bush or would have been under President McCain.
#3) Adam: Do you feel that your outspoken views preclude you from future government appointments?
Mr. Black: My crucial CLGs (”career limiting gestures”) were being a serial whistleblower and helping to cause two presidential appointees (i.e., my bosses) to resign in disgrace. I also played some role in Speaker Wright’s decision to resign in disgrace and the embarrassment of the Keating Five. Pointing out that
Today, we have federal deposit insurance Therefore, the probabilities and magnitude of depositor runs on banks are much reduced compared with 1933. Yet, we can see “runs” by stockholders and other creditors of banks if there is a suspicion of financial problems. If the Fed is required to publish the names of financial institutions to which it has extended credit and this publication induces financial institutions to refrain from borrowing from the Fed, one can only speculate if this would be the tinder for another liquidity conflagration in the coming months.
How about a little honesty from commentators in the mainstream media?
"Liquidity conflagrations" happen when people discover they have been lied to.
Anyone remember Bear Stearns? "We’re well capitalized" on CNBC? "Everything is fine"? Cramer’s pumping of them on his show as "safe"?
Market participants in fact knew everything was not fine. There were statements flying around (that turned out to be true) that some counter-parties had begun refusing to novate deals with Bear.
It was the discovery of the lie that caused the run on Bear Stearns and its ultimate collapse.
Likewise with Lehman. Remember Dick Fuld’s "I’m gonna burn the shorts" comment, again, on CNBC and elsewhere in the National Media?
The truth got out: they were having liquidity problems. Once again, as soon as people discerned that they were being lied to, Lehman’s fate was sealed.
The problem The Fed has is that as the supposed "risk regulator" for the American Banking System it has absolutely refused to do its job of prudential regulation and still is. Instead of demanding that its member banks hold capital against all unsecured lending it has "blessed" models rather than markets. But at the same time it has declared "haircuts" against collateral that make clear that so-called "face value", or "par", is a farce.
The Fed is supporting institutionalized lying – that is, the intentional…
Occasionally, even the most hopeless of politicians get something right. Here is stunning proof:
Barney Frank:
I have been pushing for more openness from the Fed. I want to restrict the powers of the Federal Reserve. First of all, the Fed will be the major losers of power if we are successful, as I believe we will be, setting up a financial product protection commission.
The Federal Reserve is now charged with protecting consumers. They were supposed to do subprime mortgage restrictions.
Congress in 1994 gave the Fed powers to ban subprime mortgages. Alan Greenspan refused to do it. They had the power to ban credit card abuses. Under Greenspan they did nothing. Under Bernanke they started but only after Congress acted.
That’s one of the reasons why in the new consumer protection agency, we will take away from the Federal reserve the power to go consumer protection.
Secondly, they have has since 1932 a right under Herbert Hoover to intervene in the economy whenever they could. Last September, the Federal Reserve they were going to advance $82 billion to AIG.
I was kind of surprised and said Mr Bernanke do you have $82 billion? Mr. Bernanke replied I have $800 billion and under section 13.3 of the Federal Reserve Act they can lend anything they want.
We are going to curtail that lending power. We are going to put some restrictions on it.
Finally we will subject them to a complete audit. I have been working with Ron Paul, who is the main sponsor of that bill. He agrees that we don’t want to have the audit appear as if influences monetary policy as that would be inflationary.
One of the things the audit will show you is what the Federal Reserve buys itself. And that will be made public, but not instantly because if it was made instantly people would be trading off it, so the data would be released after a time period of several months, enough time so it will not be market sensitive.
This will probably pass in October.
This is clearly not perfect. However, it is a step in the right direction. The only reason it it may happen is people are overwhelmingly in support of it. Change is possible, over
1-3)The Fed Has a Corpse In a Car Minus a Head In the Garage… I’m Winston Wolfe; I Solve Problems… The Fed’s Bonnie Situation…
The cartoonish game show nature of politics occasionally makes for fine entertainment. And the next two days have the potential to push the needle far to the right-hand side of the dial, well into the red zone where human eardrums are known to burst and bleed and animals begin to attack one another. In some circles, that’s entertainment.
The Federal Reserve Chairman is on Capitol Hill today for a two-day hoot & holler, mainly with Congressman Ron Paul, who wants to, one, abolish the Fed, and two, barring that, at least find out what in the hell they are doing over there all day.
This isn’t News, not in the traditional sense anyway, but it’s crucial in the gambling sense. There was a time when a smug Bernanke would have sneered derisively at Paul, who although well versed in the inevitable outcome of a central-bank engineered credit expansion is handicapped by the fact he bears a striking resemblance to a nutty uncle who sips Gin & Mountain Dew all day while tinkering over a boiling pot of squirrel-brain stew. He could also be armed. We just can’t be sure.
That kind of eccentricity might slide by unnoticed in Galveston, but not Washington D.C., which savagely punishes all things different according to Strict Party Lines, which is to say it swallows difference whole and vomits it back up in a putrid spray of homogenized pork drippings and boastful do-goodery.
Sorry. Again, that’s not News. But if you are prone to wager on the outcome of these game shows, either professionally or as a sideline hobby, it’s a useful nugget to keep in the back of your mind. Somehow Paul has managed to scare up 250 some-odd co-sponsors for his bill demanding Congress be allowed to Audit the Federal Reserve. This is what the political experts refer to as Momentum. And when the Chairman of the Fed goes so far as to directly address proposed legislation you know the pig has been greased and the chute…
The feisty congressman from Texas, whose insurgent "Ron Paul Revolution" presidential campaign rankled Republican leaders last year, now has the GOP House leadership on his side — backing a measure that generated paltry support when he first introduced it 26 years ago.
Paul, as of Tuesday, has won 245 co-sponsors to a bill that would require a full-fledged audit of the Federal Reserve by the end of 2010.
The bill would call for the comptroller general in the Government Accountability Office to audit the Fed and report those findings to Congress. The GAO’s ability to conduct such audits now is severely restricted.
A slew of top Republicans are backing the bill, as are many Democrats.
"Ron Paul has the right idea on this," said Sen. Jim DeMint, R-S.C., who supports similar legislation in the Senate. "I’m just hoping we can get a clear audit. … We need to know what they’re up to."
Unfortunately for Paul, the bill appears to be idling in the House Financial Services Committee, which is chaired by Barney Frank, D-Mass. The bill has been sitting there, gathering co-sponsors, since Paul introduced it in late February.
Calls to Frank’s office were not returned.
Paul acknowledged that his bill hasn’t advanced but said Frank has "promised" him he will deal with his bill and is willing to give it a hearing. Paul said it’s easily got the "momentum" to pass the full House.
A representative with the Federal Reserve could not be reached for comment. DeMint told FOX News last week that the measure would have a good chance of passing the Senate if supporters can push Paul’s to a vote, which he said would be successful, in the House.
"The whole process is unconstitutional. There is no legal authority to operate such a monetary system," Paul said in February, in a statement calling for Washington to "end the Fed."
DeMint amendment to audit the Federal Reserve blocked by Senate Leadership
Senator Jim DeMint (R-SC) is blocked by Senate Democrat Leadership from having a vote on his amendment to audit the Federal Reserve, based on a bill authored by Congressman Ron Paul (R-Texas) in the House, H.R. 1207, and Senator Bernie Sanders (D-Vermont) in the
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While US banks have been busy refocusing their "creative financial products"-time over the past two months, instead defending against allegations of muppetism, or explaining how hedging is really betting it all on red, and then doubling down (just because the casino supposedly has the bank's back), Europe has been busy coming up with new and creative ways of betting on the demise of FaceBook. While official shorting of the most overhyped and overvalued company in history only became a reality for most investo...
Rich Adamonis, NYSE (NYSE: NYX) spokesperson told Benzinga "In response to incorrect reports re: NYX and Facebook (NDAQ: FB): There have been no discussions with Facebook regarding switching their listing in light of the events of the last week, nor do we think a discussion along those lines would be appropriate at this time.”
First we'll go to the technicals. Back in mid April I had opined a 'bear flag' formation was being created. [Apr 17, 2012: Potential Bear Flag Forming] But the market being the difficult beast it is, head faked everyone and rather than a break down from said flag it first went UP and nearly touched yearly highs. This caused everyone to think the bear flag had failed…. only to lead to a horrid May in the market. Generally a bear flag will resolve relatively quickly but the longer...
Despite the fact that U.S. equities are well-positioned and well-supported to go up, once again it is the headlines out of Europe—especially Greece—that are scaring off investors. Some are saying that it is now likely (and even desirable) that Greece will default on all its sovereign debt, withdraw from the euro, and severely devalue its domestic currency (Drachma?). This will allow them to operate a balanced budget while pumping cash into growth initiatives, rather than suffer the ravages of Germany-mandated austerity.
Some say, so what? Greece makes up only about 2% of the Eurozone’s overall economy. Nevertheless, you might say that this new “Grecian Formula” is creating the opposite effect to the men’s hair product, i.e.., rather than losing the gray we are al...
Markets died and then rallied to flat again as European leaders “prepared contingencies” for a possible Grexit
Markets died hard and fast earlier today as major indexes registered as much as 1.5% of losses after news that Euro zone officials were unofficially “preparing contingencies” for a Greek exit from the Euro. Unofficial statements were not enough to keep markets down however, as major indexes rallied back to flat levels by the end of the day.
So the world continues to wait on Europe, as the SPDR S&P 500 ETF (NYSEACA:SPY) gained .05%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:...
T - AT&T, Inc. – U.S. equities are on the decline as Europe’s woes once again take center stage. Shares in AT&T, down 0.90% at $33.24 this afternoon, are faring better than most of the other Dow components so far, though options activity on the wireless carrier suggests some strategists are bracing for further declines ahead of the long w...
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In this article, please revisit an article written two years ago titled, "The Calm Before the Storm." This article focused on the patent cliff that was looming in the pharmaceutical industry, that was later picked up by the New York Times and several other bloggers! Subsequent articles were written about big pharma company's revenue streams, and the pros and cons of of their later stage pipelines. Other articles have also attempted to identify smaller biotechs with the potential to reap big reward...
My last weekend update is dated from January 30 so after a long hiatus, here is an update of our virtual portfolio. Since the last update, we have closed the AA Money portfolio due to a lack of enthusiasm (and activity) and I have stopped tracking the FAS strangle as the low VIX makes it hard to get rewarded for the risk! But we have added a small $5KP virtual portfolio which does not use any margin.
FAS Money
We have had to recover from a big move up by FAS and a low VIX which keeps option prices low. But the portfolio has gaine about 10% since the last update.
Last update P&L - $5499.00
IWM Money
Not a lot of activity in this portfolio where the main focus is on the large IWM BCS. But the portfolio has grown over 20% since the last update.
Last update P&L - $1998.00
$5KP Portfolio
This is the virtual portfolio that replaced the AA Money portfolio. It does not use margin and we will keep holdings under $5K.
AAPL $50K P...
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How about a little honesty from commentators in the mainstream media?
The Fed is supporting institutionalized lying – that is, the intentional…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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