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by YankeeJim | July 25, 2011 at 12:06 pm
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Conflicts of intetest
NowPublic Rene says looky here. Maybe this is why Geithner wants out.
“Federal Reserve audit highlights possible conflicts of interest
By Neil Irwin, Published: July 21
When the Federal Reserve launched an unprecedented series of interventions in the financial system in 2008, it often moved so quickly that the usual practices for preventing conflicts of interest couldn’t keep up, according to a new report.
An audit of the Fed’s emergency lending programs by the Government Accountability Office, ordered by the financial reform law passed last year and released Thursday, reports generally sound financial management by the central bank as it undertook programs that deployed trillions of dollars to backstop a faltering financial system. But it brings to light difficult issues that arose when the Fed undertook actions that its rules never envisioned.
For instance, William C. Dudley, the president of the Federal Reserve Bank of New York who was a senior official there in 2008, owned stock of American International Group before the Fed bailed out the giant insurance firm. The GAO report did not mention him by name, but Sen. Bernie Sanders (I-Vt.), who spearheaded the audit, identified Dudley as the unnamed official described in the report.
Lawyers at the New York Fed allowed Dudley to continue owning the shares while working on issues relating to the bailout. They concluded that for him to sell the shares immediately after the central bank bailed out the firm would be more ethically problematic than simply holding onto them and selling at a later date.
Dudley “held shares in these companies as part of his personal portfolio that predated his service at the New York Fed,” a spokesman for the central bank said. “A waiver was granted allowing him to hold these shares based in part on the judgement that had he sold these shares immediately after the interventions it would have the appearance of a conflict.”
The GAO report did not condemn the Fed’s actions, it simply illuminated them. Dudley has subsequently sold all the shares on dates agreed to with the bank’s ethics officers, the spokesman said.
The GAO also recommended that the Fed make clearer and more rigorous its policies for hiring independent contractors to manage investment programs. During the crisis, the New York Fed hired outside firms to manage many of its special lending programs, such as one designed to backstop the market for short-term corporate loans, without holding a normal bidding process for the contracts.
The report also found that lines of authority between the Fed’s Board of Governors in Washington and the 12 regional Fed banks around the country were sometimes muddled during the crisis. For example, it was not always clear where authority resided on questions of what collateral would be adequate for an emergency loan.
The report was the latest to detail aspects of the Fed’s actions during the financial crisis that were shrouded in mystery at the time. Another provision in last year’s Dodd-Frank Wall Street regulatory overhaul, also instigated by Sanders, required the disclosure of what individual banks and other entities received loans from the Fed.
“As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” Sanders said in a statement. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”
The Fed’s general counsel, Scott Alvarez, said in a letter responding to the GAO’s audit that officials will “strongly consider” the recommendations.”
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YankeeJim
Arlington, Virginia, United States
Most RecentMost Recommended Comments (26)
at 12:09 on July 25th, 2011
Sanders said in a statement. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”
Continue reading at NowPublic.com: Federal Reserve Audit | NowPublic News Coverage http://my.nowpublic.com/world/federal-reserve-audit#ixzz1T9NH9uur
at 12:44 on July 25th, 2011
Corporate welfare is a very important aspect of the social welfare state.
at 13:34 on July 25th, 2011
God Bless You and God Bless America.
at 14:13 on July 25th, 2011
And may all your tomorrows be filled with what the government owes you.
at 16:11 on July 25th, 2011
As I recall $770 biliion was authorized by Congress and President Bush as the TARP bill bailout, under threat of martial law in the rooms of Congress.
Where do they get the gall to hand out $16 TRILLION? and secretly and to foreign banks. this is treason in my book. I do not care what dam party is concerned.
Senator Bernie Sanders reports: "...the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs."
http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3
If that doesn't piss you off, no matter what party you belong to or what country, you must have ice-water for blood.
and, yeah, tax-dodger Geithner was part and parcel to these deals.
P.S. there's a link to the GAO FED Audit Report on Sanders article.
at 17:26 on July 25th, 2011
Good work, Rene.
at 17:28 on July 25th, 2011
The only person to come forward with that story is Rep. Brad Sherman D. Calif.. Who declared, “The only way they can pass this bill is by creating and sustaining a panic atmosphere. Many of us [in Congress] were told in private conversations that if we voted against this bill on Monday that the sky would fall, the market would drop two or three thousand points the first day, another couple of thousand the second day, and a few members were even told that there would be martial law in America if we voted no.”. No one ever investigated this statement and the media let it go viral because it suited their anti-Bush attitude.
Oddly enough it sounds much like what the Democrats have been screaming over this debt ceiling for the past 2 weeks. The end of the world is neigh. The sky will fall. The global markets collapse, etc.etc..
at 17:33 on July 25th, 2011
I am burrying money in coffee cans all around the yard.
at 17:57 on July 25th, 2011
You'd be better off burying the coffee in the coffee cans. The dollar will drop like flies come the first cold snap.
at 19:28 on July 25th, 2011
I would like to also point out that it is incorrect to insinuate that TARP and the other bailouts lead to this crisis of deficit. It's untrue. For the past 60 years every government has gone to the limits offered by raising the debt ceiling while they have avoided paying down the national debt.
The growth of the nations debt tripled in size from $260 billion in 1950 to around $909 billion in 1980. Quadrupled from 1980 to 2000 to 3.4 trillion. Doubled from 2000 to 2008 to 7.5 trillion, and doubled again from 2009 to 2011 to 14.2 trillion by Feb. 2011.
This is the debt Geithner said paying the interest on was a dumb idea.<.P>
The total or gross national debt is the sum of the "debt held by the public" and "intragovernmental" debt. As of February 2011, the "debt held by the public" was $9.6 trillion and the "intragovernmental debt" was $4.6 trillion, for a total of $14.2 trillion. The national debt is also described in terms of marketable vs. non-marketable securities. As of February 2011, total marketable securities were $9.0 trillion while the non-marketable securities were $5.2 trillion. Most of the marketable securities are Treasury notes, bills, and bonds held by investors and governments globally. The non-marketable securities are mainly the "government account series" owed to certain government trust funds such as the Social Security Trust Fund, which represented $2.5 trillion dollars in 2010. Now zero. Other large intragovernmental holders include the Federal Housing Administration, the Federal Savings and Loan Corporation's Resolution Fund and the Federal Hospital Insurance Trust Fund (Medicare).
Then there is Fannie Mae and Freddie Mac which the government is responsible for covering the 5 trillion in mortgage payment guarantees of the housing crash. Which brings us to the 700 billion TARP. TARP is a bust. Government can say this has been returned or that has been returned but as fast as it came in it's been spent. The hole is still there.
The real kicker is future obligations. The U.S. government is committed under current law to mandatory payments for programs such as Medicare, Medicaid and Social Security. The GAO projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues and Social Security payouts exceeded payroll taxes in fiscal 2010. These deficits require funding from other tax sources or borrowing.
The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that would have had to be set aside during 2009 [NOT 2011] such that the principal and interest would pay for the unfunded commitments through 2084. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and Medicaid. In other words, health care programs are nearly five times as serious a funding challenge as Social Security. Adding this to the national debt and other federal commitments brings the total obligations to nearly $62 trillion.
That is the 62 trillion dollar fiscal can Obama is kicking down the road for the taxpayer to worry about later. And why Republicans want cuts tied to spending now.
at 19:44 on July 25th, 2011
Source: cbpp.org
Source: cbpp.org
The above analysis was provided by Robert Greenstein, identified as ....
Source: cbpp.org
at 21:04 on July 25th, 2011
Class warfare has been underway for some time now. Don't worry to much about the details" just get ready. The real nature of people is about to be witnessed on a scale that has not been seen since WW2.Except this time, it wont be Americans watching people on CNN it will be the world watching Americans on Aljazeera. Shock and Awe!
at 22:01 on July 25th, 2011
class warfare / when 50% of the population demand 100% coverage from 2% of the population
at 02:52 on July 26th, 2011
When 400 people own 50% of America's wealth, you bet there is class warfare.
at 23:29 on July 25th, 2011
A democracy will continue to exist up until the time voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by dictatorship.
at 02:53 on July 26th, 2011
Social Security is no benefit, it is a necessity.
at 07:17 on July 26th, 2011
You know when all the hard work, doing with out, saving and investment for the future have reached "success". You are told by those who refused to work hard to achieve, do with out, save, or invest for the future how much you now owe them.
at 09:18 on July 26th, 2011
That is a false observation. Most people work hard. None have an equal start. It is always uneven. Some have more ability than others, though all human beings should respect one another equally IMO. Capitalism as such is flawed.
at 10:06 on July 26th, 2011
That we are not born into this world as equals does not mean that my birth and my labor are yours by right to usurp to your needs. It isn't capitalism that is flawed. It's the socialist who wants by right to take from a private property exchange based market economy with out giving anything in return. That his or her welfare is the burden of the State.
at 11:25 on July 26th, 2011
Must not be a Christian.
at 11:39 on July 26th, 2011
Nor a Muslim, nor a Jew. The last defender of the individual and his rights to live as a free man, to hold property, and to have his efforts be his to exchange freely for the goods and services he believes are of equal value.
at 10:44 on July 26th, 2011
Capitalism is parasitic, demanding and extracting more and more from the so called middle class and all those aspiring to be in the middle class while the rich take the wealth extracted from the labor of those below them and multiply their wealth.
The nonsense about job creation is just that, nonsense. No, let me rephrase. Jobs were created overseas where the rich relocated their jobs to avoid paying the American worker a livable wage.
Starvation wages paid overseas by the American rich go a long way in the so called Third World, which is the goal OF the rich here, to depress wages until American workers' wages are comparable TO the Third World, while taking away all manner of safety regulation.
That's why all states in the U.S. with Republican governors at the helm are engaging in workers union busting tactics to dismantle any protections American workers have had to stave off attacks from those that would exploit them.
at 11:21 on July 26th, 2011
With out capitalism there is no middle class. With out private property rights there is no free market economy to create a middle class. With out individual rights and freedoms there is no free market economy, no private property and no middle class. Socialism and the victim mentality erode all of this until the individual is enslaved to the mob. Socialist and unionist are there own worst enemy. Their last refuge is always government service employment where they can hold the taxpayer hostage to their demand for more wages, less working hours, and more benefits, as the economy they put to ruin in the name of ideological immediacy dies around them.
at 08:25 on July 26th, 2011
Those with wealth owe me.
The rich will pay.
My demands on government have no effect on the national economy.
The debt incurred by my right to be cared for by the government will not effect my standard of living.
The government is responsible not me.
The government owes me.
I have a right to a job.
All employment is the oppression of the worker.
I have a right to have a union set the conditions for my employment, not the employer.
I. ME. MINE. Are conditional on the exploitation of the rights of others. That is my primary right and societies debt to me.
It's not my fault.
at 10:54 on July 26th, 2011
ALERT: JULY 26 2011 MASSIVE CHEM-TRAIL ATTACK NEW MEXICO AND NORTHERN ARIZONA. UNMARKED PLANES LEAVING CHEM GRIDS. RESIDENTS SICKENED
at 16:57 on July 26th, 2011
The depth and complexity of this economic issue seem to be best explained by .30-06 post at 20:28 on July 25 concluding with..
..' the national debt and other federal commitments brings the total obligations to nearly $62 trillion'..
This economic problem facing us today will take hundred years to pay debt obligation..