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The Three-Pronged Attack on the Fed

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The more it squirms in secrecy and denial, the more public resentment builds.

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Fed Faces Subpoena Over AIG (AIG) bailout

On Tuesday I commented on House Plans to Subpoena Geithner Over AIG Decisions.

AP

Rep. Edolphus Towns, D-NY, said Tuesday he will subpoena the New York Fed for documents related to the bailout of failed insurer American International Group Inc.

Towns chairs the House Oversight and Government Reform Committee. The committee is investigating deals that diverted billions of AIG bailout dollars to banks including Goldman Sachs Group Inc. (GS).

The committee has been investigating e-mails from New York Fed lawyers telling AIG not to disclose details about the deal. The emails were released last week by California Rep. Darrell Issa., the committee's top Republican.

Issa asked Towns to subpoena the New York Fed after the Fed blocked a separate request for documents.


Audit the Fed

Of course we cannot forget Ron Paul's "audit the Fed" measure that has passed the house. These measures show just how angry everyone is over the Fed.

The Fed has increased that anger and resentment by pointing the finger at everyone else. For details, please see Ben Bernanke Looks In Mirror, Sees Barney Frank.

Three-Front Attack

  • Appeals Court to Hear Bloomberg's Freedom of Information Suit

  • Fed Faces Subpoena Over AIG bailout

  • Audit the Fed


The more the Fed squirms in secrecy and denial, the more public resentment builds. The more public resentment builds, the more likely the Senate will go along with "audit the Fed."

What's on the Fed's Balance Sheet?


The Fed's balance sheet (better thought of as a diaper or a garbage dump), is not only smelly, it is bulging bigger by the day.

We have a right to know what the Fed is doing, what the assets it's holding are worth, and what arrangements it might have illegally made with AIG or others.

Yesterday, the Washington Post reported Federal Reserve earned $45 billion in 2009.

I have a few questions.

Really?!

  • Does that count the $185 billion the NY Fed crammed down taxpayers throats over AIG?

  • Does that count the real cost of any of its other inane off-balance-sheet recommendations approved by Congress at taxpayer expense?

  • Does that include a marked-to-market accounting of mortgage-backed securities on its balance sheet?

  • Does that include a marked-to-market accounting of anything other than specific items the Fed wanted marked-to-market?


The Fed conveniently ignores all of its recommendations that cost taxpayers hundreds of billions of dollars, some done illegally, and then has the self-serving, selective-myopia gall to talk about "gains."

Bloomberg argues that the public has the right to know basic information about the "unprecedented and highly controversial use" of public money. Anyone thinking clearly has to agree.

No positions in stocks mentioned.
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