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Journalist @baltimoresun writer artist runner #amwriting Chaplain PIO #partylikeajournalist
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Showing posts with label Bus Econ Federal Reserve Board. Show all posts
Showing posts with label Bus Econ Federal Reserve Board. Show all posts

Tuesday, November 26, 2013

Daily Grind: Fed's $1 trillion a year subsidy to banks to continue under Yellen's watch

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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.
A Life LineHarry Reid seems to have thrown not much of a life line to Democrats.
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
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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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Friday, December 09, 2011

GAO audit of the Federal Reserve Board’s emergency loan programs and actions during the recent financial crisis

GAO audit of the Federal Reserve Board’s emergency loan programs and actions during the recent financial crisis

http://www.scribd.com/doc/75285818/GAO-audit-of-the-Federal-Reserve-Board%E2%80%99s-emergency-loan-programs-and-actions-during-the-recent-financial-crisis-%E2%80%93-%E2%80%9CFederal-Reserve-System-Opportuniti





Federal Reserve System: Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance  http://www.gao.gov/products/GAO-11-696

GAO-11-696 July 21, 2011
Highlights Page (PDF)   Full Report (PDF, 266 pages)   Accessible Text   Recommendations (HTML)



Summary

The Dodd-Frank Wall Street Reform and Consumer Protection Act directed GAO to conduct a one-time audit of the emergency loan programs and other assistance authorized by the Board of Governors of the Federal Reserve System (Federal Reserve Board) during the recent financial crisis. 
This report examines the emergency actions taken by the Federal Reserve Board from December 1, 2007, through July 21, 2010. For each of these actions, where relevant, GAO's objectives included a review of (1) the basis and purpose for its authorization, as well as accounting and financial reporting internal controls; (2) the use, selection, and payment of vendors; (3) management of conflicts of interest; (4) policies in place to secure loan repayment; and (5) the treatment of program participants. To meet these objectives, GAO reviewed program documentation, analyzed program data, and interviewed officials from the Federal Reserve Board and Reserve Banks (Federal Reserve System).
On numerous occasions in 2008 and 2009, the Federal Reserve Board invoked emergency authority under the Federal Reserve Act of 1913 to authorize new broad-based programs and financial assistance to individual institutions to stabilize financial markets. Loans outstanding for the emergency programs peaked at more than $1 trillion in late 2008. The Federal Reserve Board directed the Federal Reserve Bank of New York (FRBNY) to implement most of these emergency actions. In a few cases, the Federal Reserve Board authorized a Reserve Bank to lend to a limited liability corporation (LLC) to finance the purchase of assets from a single institution. In 2009 and 2010, FRBNY also executed large-scale purchases of agency mortgage-backed securities to support the housing market. The Reserve Banks' and LLCs' financial statements, which include the emergency programs' accounts and activities, and their related financial reporting internal controls, are audited annually by an independent auditing firm. These independent financial statement audits, as well as other audits and reviews conducted by the Federal Reserve Board, its Inspector General, and the Reserve Banks' internal audit function, did not report any significant accounting or financial reporting internal control issues concerning the emergency programs. The Reserve Banks, primarily FRBNY, awarded 103 contracts worth $659.4 million from 2008 through 2010 to help carry out their emergency activities. A few contracts accounted for most of the spending on vendor services. For a significant portion of the fees, program recipients reimbursed the Reserve Banks or the fees were paid from program income. The Reserve Banks relied more extensively on vendors for programs that assisted a single institution than for broad-based programs. Most of the contracts, including 8 of the 10 highest-value contracts, were awarded noncompetitively, primarily due to exigent circumstances. These contract awards were consistent with FRBNY's acquisition policies, but the policies could be improved by providing additional guidance on the use of competition exceptions, such as seeking as much competition as practicable and limiting the duration of noncompetitive contracts to the exigency period. To better ensure that Reserve Banks do not miss opportunities to obtain competition and receive the most favorable terms for services acquired, GAO recommends that they revise their acquisition policies to provide such guidance. FRBNY took steps to manage conflicts of interest for its employees, directors, and program vendors, but opportunities exist to strengthen its conflict policies. In particular, FRBNY expanded its guidance and monitoring for employee conflicts, but new roles assumed by FRBNY and its employees during the crisis gave rise to potential conflicts that were not specifically addressed in the Code of Conduct or other FRBNY policies. For example, FRBNY's existing restrictions on its employees' financial interests did not specifically prohibit investments in certain nonbank institutions that received emergency assistance. To manage potential conflicts related to employees' holdings of such investments, FRBNY relied on provisions in its code that incorporate requirements of a federal criminal conflict of interest statute and its regulations. GAO makes seven recommendations to the Federal Reserve Board to strengthen policies for managing noncompetitive vendor selections, conflicts of interest, risks related to emergency lending, and documentation of emergency program decisions. The Federal Reserve Board agreed that GAO's recommendations would benefit its response to future crises and agreed to strongly consider how best to respond to them.



Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:Orice Williams Brown
Team:Government Accountability Office: Financial Markets and Community Investment
Phone:(202) 512-5837


Recommendations for Executive Action


Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to revise Reserve Banks' formal acquisition policies and procedures to provide additional guidance on the steps staff should follow in exigent circumstances, specifically to address soliciting as much competition as possible, limiting the duration of noncompetitive contracts to the period of the exigency, and documenting efforts to promote competition.

Agency Affected: Federal Reserve System: Board of Governors

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.



Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff, as part of the Federal Reserve System's planned review of the Reserve Banks' codes of conduct given their expanded statutory authority under the Dodd-Frank Act, to consider how Reserve Banks' experience managing employee conflicts of interest, including those related to certain nonbank institutions that participated in the emergency programs, could inform the need for changes to the Reserve Banks' conflict policies.

Agency Affected: Federal Reserve System: Board of Governors

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.



Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to finalize a comprehensive policy for FRBNY's management of risks related to vendor conflicts of interest that formalizes FRBNY practices and lessons learned from the crisis. This policy could include guidance on when to include contract protections that were not always found in FRBNY's vendor contracts, such as requirements for higherrisk vendor firms to provide a written conflict remediation plan and certify compliance with this plan.

Agency Affected: Federal Reserve System: Board of Governors

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.



Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to strengthen procedures in place to guide Reserve Banks' efforts to manage emergency program access for higher-risk borrowers by providing more specific guidance on how Reserve Bank staff should exercise discretion and document decisions to restrict or deny program access for depository institutions and primary dealers that would otherwise be eligible for emergency assistance.

Agency Affected: Federal Reserve System: Board of Governors

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.



Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to document a plan for estimating and tracking losses that could occur under more adverse economic conditions within and across all emergency lending activities and for using this information to inform policy decisions, such as decisions to limit risk exposures through program design or restrictions applied to eligible borrowing institutions.

Agency Affected: Federal Reserve System: Board of Governors

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.



Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff, in drafting regulations to establish the policies and procedures governing emergency lending under section 13(3) of the Federal Reserve Act, to set forth the Federal Reserve Board's process for documenting, to the extent not otherwise required by law, its justification for each use of this authority.

Agency Affected: Federal Reserve System: Board of Governors

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.



Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to document the Federal Reserve Board's guidance to Reserve Banks on types of emergency program decisions and risk events that require approval by or consultation with the Board of Governors, the Federal Open Market Committee, or other designated groups or officials at the Federal Reserve Board.

Agency Affected: Federal Reserve System: Board of Governors

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
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(November 22, 2011 Hat Tip: James M. Graham III: “This is a bit scary! If this does not anger you, you don't understand the corruption. Please send this to everyone you know that wishes to keep their property and live in a free country. http://www.silverbearcafe.com/private/10.11/gaoaudit.html)

The Silver Bear Café:
Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailoutsunelected.org
The first ever GAO(Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out. Ben Bernanke(pictured to the right), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning.

What was revealed in the audit was startling: read on -  http://www.silverbearcafe.com/private/10.11/gaoaudit.html)

[…]

The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows..

Citigroup: $2.5 trillion ($2,500,000,000,000)

Morgan Stanley: $2.04 trillion ($2,040,000,000,000)

Merrill Lynch: $1.949 trillion ($1,949,000,000,000)

Bank of America: $1.344 trillion ($1,344,000,000,000)

Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)

Bear Sterns: $853 billion ($853,000,000,000)

Goldman Sachs: $814 billion ($814,000,000,000)

Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)

JP Morgan Chase: $391 billion ($391,000,000,000)

Deutsche Bank (Germany): $354 billion ($354,000,000,000)

UBS (Switzerland): $287 billion ($287,000,000,000)

Credit Suisse (Switzerland): $262 billion ($262,000,000,000)

Lehman Brothers: $183 billion ($183,000,000,000)

Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)

BNP Paribas (France): $175 billion ($175,000,000,000)


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http://www.scribd.com/doc/75285818/GAO-audit-of-the-Federal-Reserve-Board%E2%80%99s-emergency-loan-programs-and-actions-during-the-recent-financial-crisis-%E2%80%93-%E2%80%9CFederal-Reserve-System-Opportuniti

GAO audit of the Federal Reserve Board’s emergency loan programs and actions during the recent financial cr...

[20110700 TARP GOA FED d11696]

GAO, Federal Reserve System, TARP, banks, banking, bailouts, Dodd-Frank, Wall Street, Dodd-Frank Wall Street Reform and Consumer Protection Act
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[ 20111122 July 2011 GOA FED Tart Hat Tip Graham]

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