Courtesy of Pam Martens
Janet Yellen
At 10 a.m. tomorrow morning, one day ahead of President-Elect Joe Biden’s inauguration, the Senate Finance Committee will hold the confirmation hearing for Janet Yellen to become the next U.S. Treasury Secretary. In that role, Yellen sits atop a sprawling federal agency that includes the IRS; the Office of the Comptroller of the Currency, which regulates national banks and reports on their hundreds of trillions of dollars in derivatives; the Bureau of Engraving and Printing; the U.S. Mint; the Financial Crimes Enforcement Network (FinCEN) which is tasked with combating money laundering but has failed miserably in the job; and numerous other units.
In addition, legislation passed by Congress puts Yellen in charge of the slush fund known as the Exchange Stabilization Fund; makes her the Chair of the Financial Stability Oversight Council, and, thanks to stealthy legislation passed during the Trump administration, the Treasury Secretary is now a permanent member of the National Security Council (NSC).
The National Security Council was created in 1947. For the next 70 years the Treasury Secretary was invited to sit on the NSC at the invitation of the President. Donald Trump’s Treasury Secretary, Steve Mnuchin, who came to that role after serving as National Finance Chairman of Trump’s presidential campaign, became the first Treasury Secretary to be a permanent part of the NSC thanks to a provision added to the 2018 Foreign Investment Regulatory Review Modernization Act. That provision is now codified into law at 50 U.S. Code § 3021.
The change in the law governing the NSC was discussed by Robert M. Kimmitt, a lawyer at the big corporate law firm, WilmerHale, last Friday via a column for Bloomberg Law. We could find no news article carried by mainstream media on the change in the law in 2018, or since then.
As Wall Street On Parade reported recently, as a result of the 2010 Dodd-Frank financial reform legislation, the Treasury Secretary is also permitted to take the Federal Reserve hostage during a financial crisis. Section 1101 of the Dodd-Frank Act provides that the Federal Reserve Board, “may not establish any program or facility under this paragraph without the prior approval of the Secretary of the Treasury.” The referenced paragraph pertains to the Fed’s ability to enact emergency lending facilities during a financial crisis. In other words, assuming Yellen is confirmed, the Federal Reserve must now say “may I” to a Cabinet Secretary in the Executive Branch before implementing any new emergency lending programs. So much for Fed independence. (For how that worked out in the Trump administration, see 75% of the $454 Billion CARES Act Money Never Went to the Fed; It Was Invested by a Mnuchin Slush Fund Called the ESF.)
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