Nov. 26, 2013
Fed's $1 trillion a year subsidy to banks to continue under Yellen's watchWith no filibuster, the Senate is set to rubber stamp Janet Yellen as the next Fed head, meanwhile, the American people and their representatives have no idea which banks foreign and domestic are benefitting from the Fed's $1 trillion annual subsidy.
The 17th Amendment: 100 years laterAny elementary social studies student can tell you that the Senate is the "legislative cooling saucer" and the voice of the smaller, less powerful states. Now compromised on both fronts, it is worth repeating Thomas Jefferson's query: What exactly is the purpose of the Senate?
Crudele: On false job numbers, did the White House know?"Did White House know about fabricated and manipulated job numbers before 2012 election?"
Fed's $1 trillion a year subsidy to banks to continue under Yellen's watch
By Robert Romano
With the filibuster against most presidential nominees now eliminated — well, sort of, Senate Democrats did not actually amend the rules, they just voted to pretend they don't exist — the confirmation of Janet Yellen to be the next chair of the Federal Reserve is all but certain.
Which is too bad.
Of all nominees, blocking cloture on Yellen could have been worthwhile. With the Fed creating $85 billion a month in its quantitative easing programs, the Senate has no business confirming any Fed chair until it and the whole country knows more about the policy.
Specifically, the American people and their representatives have no idea which banks are benefitting from the Fed's $1 trillion annual subsidy.
The only way to know will be if there is a regular audit of the practice, since all that can be seen now is by how much the central bank's balance sheet of securities is expanding — telling us very little about who is receiving the money?
In the last one-time audit of the Fed under Dodd-Frank in 2010, it was ascertained that of the $877.3 billion of mortgage bonds the central bank had purchased that were included in the audit, some $442.7 billion — more than half — were bought from foreign banks.
These included $127.5 billion given to MBS Credit Suisse (Switzerland), $117.8 billion to Deutsche Bank (Germany), $63.1 billion to Barclays Capital (UK), $55.5 billion to UBS Securities (Switzerland), $27 billion to BNP Paribas (France), $24.4 billion to the Royal Bank of Scotland (UK), and $22.2 billion to Nomura Securities (Japan). Another $4.2 billion was given to the Royal Bank of Canada, and $917 million to Mizuho Securities (Japan).
According to the Federal Reserve, the securities were purchased at "Current face value of the securities, which is the remaining principal balance of the underlying mortgages." These were not loans, but outright purchases, a direct bailout of foreign firms that had bet poorly on U.S. housing.
According to the New York Fed's website, the purpose of the program was to "foster improved conditions in financial markets." But whose financial markets were we really propping up? The United States', or foreign countries'?
The $442.7 billion overseas was just a snapshot in time. The last transactions covered in the audit date all the way back to July 2010.
Since then, say, July 8 of that year, the Fed has bought another whopping $1.689 trillion of securities. And we have no idea where the central bank bought the securities from — because the practice is not audited.
If the previous audit was any indication, one presumes about 50.4 percent of the $1.689 trillion of purchases — more than $851 billion — has gone to foreign banks. But then again, who knows?
As for the $1.36 trillion of treasuries the Fed has bought since the financial crisis began in Aug. 2007, we have no idea which banks received that money.
How can Senators make an informed decision about who should serve as Fed chair overseeing a $1 trillion a year bank subsidy when they themselves have no idea where the money is even going?
Were there still a filibuster, this would have been a ripe issue for Senate Republicans to block against any Fed nominee until there is legislation providing for an annual audit of Fed securities purchases.
The fact is, the Fed's $1 trillion a year bank subsidy to banks will be continuing for the foreseeable future under Yellen's stewardship. If we're really going to still be bailing out banks more than five years after the financial crisis, shouldn't the practice at least be transparent?
It is bad enough that Congress ceded its constitutional, legislative powers over monetary policy 100 years ago to the Fed. The American people and their representatives should at least be allowed to analyze the institution's policies which have such a dramatic impact on our economic well being.
Is that really asking too much?
Robert Romano is the senior editor of Americans for Limited Government.
A Life Line
By A. F. Branco
The 17th Amendment: 100 years later
By Tom Toth
Since its original design, the United States Senate has undergone two integrally related transformations in design and purpose.
In 1913, states voted away their federal legislative voice by ratifying the 17th Amendment to the Constitution, changing the appointment of Senators to a direct election.
Under the original bicameral design of the United States legislature, the Senate was the voice of the individual, co-equal states of the union and its members were appointed by state legislatures to represent the interests of the state. The House of Representatives was conversely designed to be the complimentary voice of the people, where members from relatively small districts face election by their neighbors every 24 months.
The existence of the Senate as a second chamber of Congress was the great Constitutional compromise for small states who would have been rendered powerless to the political wills of the larger states in the union. The 17th Amendment ended this compromise.
Direct elections shift the political motivation of the individual Senator from representing the interests of his or her state to representing the same electorate as the House of Representatives, using the same device of election, changing the purpose and makeup of the Senate as a legislative body.
As with any change in the law, Constitutional amendments have consequences. If the 17th Amendment were removed and Senators were representing the states, members of the Senate would be intimately familiar in the civil affairs of their states and there would conceivably be no unfunded mandates allowed to be imposed upon states from the federal government. Further, local elections would have tangible ramifications over the national political landscape resulting in greater individual civic engagement.
Thomas Jefferson, who was serving as a Minister in France during the Constitutional Convention, inquired of George Washington why the delegates to the convention had created the Senate. Washington responded famously, "Why did you pour that tea into your saucer?" "To cool it," said Jefferson. "Even so," responded Washington, "we pour legislation into the senatorial saucer to cool it."
In 2013, the Senate abandoned its role as the "legislative cooling saucer" when Senate Majority Leader Harry Reid (D-NV) and the compliant members of his party unilaterally suspended minority power in the Senate by destroying filibuster rule for virtually all presidential nominees. The filibuster is the sole means by which the minority party in the Senate can practice legislative oversight as a governing check and balance by continuing debate until a 60-vote cloture agreement can be made. Once removed, not only do states have no representation, but neither do the nation's minority voices.
There was a common notion among the nation's framers that the deliberative process (often called "gridlock" today) is beneficial for the long-term health of the republic as a preventative protection against radical change. Conversely, "Progressives," by virtue of even their self-assumed title, resist the very notion of gridlock when they are in power. They practice public policy as if the greater good is only achievable when the "progressives'" notion of forward progress is constantly being made, otherwise their work as statesmen is irrelevant. The filibuster, a staple of Senatorial deliberations, is the tool of practical deliberation that, although frustrating for the majority party, ensures a layer of protection against bad policy. It exists to keep simple mob rule from dominating deliberations in the small, powerful legislative body.
Harry Reid stated on the morning he changed the Senate rules that action was necessary for the chamber to "evolve" in order "to remain relevant." Killing the filibuster, no matter how shortsighted politically, is the only expedient option for the left if "progress" is challenged on any significant scale. Republicans stood in the way of progress, and evolution became a necessity.
If kept, this rule change will mark as significant a fundamental transformation in the Senate as the 17thAmendment.
Contextualizing the Senate in the light of its original design, then, what is the purpose of the Senate's modern existence? The people already have direct legislative representation in the House of Representatives. The states have no federal representation from either chamber. Now, Presidential appointments can be passed by simple majority fiat and any other filibuster rules are one motion from a majority vote away from nonexistence.
Any elementary social studies student can tell you that the Senate is the "legislative cooling saucer" and the voice of the smaller, less powerful states. Now compromised on both fronts, this observer repeats Jefferson's query: What exactly is the purpose of the Senate?
Tom Toth is the Social Media Director for Americans for Limited Government.
ALG Editor's Note: In the following featured column from the New York Post, John Crudele asks what the White House knew and when did it know it on the Census Bureau's false unemployment numbers:
On false job numbers, did the White House know?
By John Crudele
Let me be the first to ask: Did the White House know that employment reports were being falsified?
Last week I reported exclusively that someone at the Census Bureau's Philadelphia region had been screwing around with employment data. And that person, after he was caught in 2010, claimed he was told to do so by a supervisor two levels up the chain of command.
On top of that, a reliable source whom I haven't identified said the falsification of employment data by Census was widespread and ongoing, especially around the time of the 2012 election.
There's now a congressional investigation of how Census handles employment data. And we can hope that we'll find out this was just an isolated incident.
But let me tell you why it might not be.
Back in 2009 — right before the 2010 census of the nation was taken — there was an announcement that the Obama administration had decided that the Census Bureau would report to senior White House aides.
The rumor was that Chief of Staff Rahm Emanuel was in charge of the nationwide head count.
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