Courtesy of Pam Martens
Congresswoman Katie Porter
Last Thursday, during the House Financial Services Committee hearing with federal regulators of banks, Congresswoman Katie Porter of California told the Vice Chairman for Supervision of the Federal Reserve, Randal Quarles, that the Fed has a “big problem.” Porter has a Harvard Law degree and was previously a law professor at the University of California Irvine School of Law. If Porter believes the Fed has a legal problem, it is highly likely it does.
Here’s how the exchange between Porter and Quarles went:
Porter: “The Fed is largely responsible for dispensing the $500 billion Congress provided as a bailout for corporate America – the biggest bailout in our country’s history, potentially. Using taxpayer dollars to buy bank debt was never part of that plan. In fact, the Federal Reserve stated explicitly in this document [holds up document] that it would not be purchasing bank debt. What happened?”
Quarles says he doesn’t know what document Porter is holding up. Porter says it’s the Fed’s own “Frequently Asked Questions” on the terms of their corporate bond buying program, which specifically states that the Fed will not be buying the bonds of any “insured depository institution,” i.e., a bank. Here is a link to that document.
Quarles: “I understand the question. We haven’t bought bank debt in those facilities.”
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