The Fed Audit

[jrance@iacwds.com 716]

The Fed Audit

 

 

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July 21, 2011

 

The first top-to-bottom audit of the Federal Reserve uncoveredeye-popping new details about how the U.S. provided a whopping $16 trillion insecret loans to bail out American and foreign banks and businesses during theworst economic crisis since the Great Depression. An amendment by Sen. BernieSanders to the Wall Street reform law passed one year ago this week directedthe GovernmentAccountability Office to conduct the study. "As a result of thisaudit, we now know that the Federal Reserve provided more than $16 trillion intotal financial assistance to some of the largest financial institutions andcorporations in the United States and throughout the world," said Sanders."This is a clear case of socialism for the rich and rugged,you're-on-your-own individualism for everyone else."

 

Among the investigation's key findings is that the Fedunilaterally provided trillions of dollars in financial assistance to foreignbanks and corporations from South Korea to Scotland, according to the GAOreport. "No agency of the United States government should be allowed tobailout a foreign bank or corporation without the direct approval of Congressand the president," Sanders said.

 

The non-partisan, investigative arm of Congress also determinedthat the Fed lacks a comprehensive system to deal with conflicts of interest,despite the serious potential for abuse. In fact, according to thereport, the Fed provided conflict of interest waivers to employees and privatecontractors so they could keep investments in the same financial institutionsand corporations that were given emergency loans.

 

For example, the CEO of JP Morgan Chase served on the New YorkFed's board of directors at the same time that his bank received more than $390billion in financial assistance from the Fed. Moreover, JP Morgan Chaseserved as one of the clearing banks for the Fed's emergency lending programs.

 

In another disturbing finding, the GAO said that on Sept. 19,2008, William Dudley, who is now the New York Fed president, was granted awaiver to let him keep investments in AIG and General Electric at the same timeAIG and GE were given bailout funds. One reason the Fed did not makeDudley sell his holdings, according to the audit, was that it might havecreated the appearance of a conflict of interest.

 

To Sanders, the conclusion is simple. "No one who works for afirm receiving direct financial assistance from the Fed should be allowed tosit on the Fed's board of directors or be employed by the Fed," he said.

 

The investigation also revealed that the Fed outsourced most ofits emergency lending programs to private contractors, many of which also wererecipients of extremely low-interest and then-secret loans.

 

The Fed outsourced virtually all of the operations of theiremergency lending programs to private contractors like JP Morgan Chase, MorganStanley, and Wells Fargo. The same firms also received trillions ofdollars in Fed loans at near-zero interest rates. Altogether some two-thirds ofthe contracts that the Fed awarded to manage its emergency lending programswere no-bid contracts. Morgan Stanley was given the largest no-bid contractworth $108.4 million to help manage the Fed bailout of AIG.

 

A more detailed GAO investigation into potential conflicts ofinterest at the Fed is due on Oct. 18, but Sanders said one thing already isabundantly clear. "The Federal Reserve must be reformed to serve the needsof working families, not just CEOs on Wall Street."

 

To read the GAO report, click here.

 

[SOPMOD 254]

16 Trillion dollars in Loans? You know if they default that they just add it to our tax burden,right?

[Peckaldee 12]

The Federal Reserve doesn't answer to any branch of US government contrary to what they would have you believe. Just because it has the word "FEDERAL" in its name doesn't mean "government ".

[Joseph 141]

don't worry the Global Banks that own and operate the federal reverse have alllready bought the most powerful army in the world(U.S Mil) , anyone who peers into that black box will surely disappear

Edited July 24, 2011 by Joebanks