Bernanke Gives Finger To The Law (Again)
by ilene - October 9th, 2009 11:49 pm
Bernanke Gives Finger To The Law (Again)
Courtesy of Karl Denninger at The Market Ticker
Kudos to Zerohedge and Jim Bianco on this one.
The Fed has repeatedly claimed they would not monetize the debt, as has Tim Geithner. Two videos:
And then this one (9 minutes into it)
That’s pretty clear.
So how does this get explained?
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These would be Fannie securities, which, I remind you, are not guaranteed by any agency of the US Government, nor are they full faith and credit obligations of same; they all bear a disclaimer substantially identical to this on the prospectus:
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So what did The Fed do? A half hour later, this:
Uh huh. The same Fannie’s that were sold a half-hour before.
Now I want to reproduce Section 14 of The Federal Reserve act once again (the salient portion):
Purchase and Sale of Obligations of United States, States, Counties, etc., and of Foreign Governments
(b)
- To buy and sell, at home or abroad, bonds and notes of the United States, bonds issued under the provisions of subsection (c) of section 4 of the Home Owners’ Loan Act of 1933, as amended, and having maturities from date of purchase of not exceeding six months, and bills, notes, revenue bonds, and warrants with a maturity from date of purchase of not exceeding six months, issued in anticipation of the collection of taxes or in anticipation of the receipt of assured revenues by any State, county, district, political subdivision, or municipality in the continental United States, including irrigation, drainage and reclamation districts, and obligations of, or fully guaranteed as to principal and interest by, a foreign government or agency thereof, such purchases to be made in accordance with rules and regulations prescribed by the Board of Governors of the Federal Reserve System. Notwithstanding any other provision of this chapter, any bonds, notes, or other obligations which are direct obligations of the United States or which are fully guaranteed by the United States as to the principal and interest may be bought and sold without regard to maturities but only in the open market.
- To buy and sell in the open market, under the direction and regulations of the Federal Open Market Committee, any obligation which is a direct obligation of, or
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site