He is the Ranking Member now. About time.
He should be the chairman of the House Financial Service Committee, replacing Barney Frank, in my opinion...
In no particular order...
H1N1 swine flu
Now the reports say WHO exaggerated the threat, influenced by the pharmaceutical industry. Oh really? What a surprise.
Global 'warming' and Climategate
The Gores are splitting, and CBS blames George W. Bush.
Panty-bomber on Christmas Eve last year and terrorists from Yemen (and US military's involvement in that country)
CIA later admitted he was allowed to board the plane under CIA's order. No matter. No one paid attention to that part. All we got out of this shady affair is the pornographic total body scan, thanks in part to the peddling by Michael Chertoff, former Homeland Security chief.
Greece sovereign debt crisis
While Greece decided to sell off national assets to pay the bankers, evil 'speculators' have moved on to the next target, Spain. Italy next? Or France next? I guess they'll need a break before attacking a major country. Maybe take a detour in Hungary?
Heath care insurance "reform" bill actually passed and signed into law
Remember that one, which will force you to purchase insurance you don't want under the threat of fines because it is your right? ('Newspeak' at its best.) Doctors sure seem to remember that well, as an increasing number of them will be calling it quits. Canadians are finding out that the government-mandated health care is not really 'free' of charge. Duh. (Why do they think Newfoundland's minister came to the US for his heart surgery?)
Times Square non-bomber (if you can call that a bomb, you are scientifically challenged)
The news died off even quicker than the panty bomber. As a reward, Pakistan will be targeted by the Obama administration for "unilateral military action".
Second wave of mortgage default due to ARM reset
I don't think that even compares with the much bigger subprime disaster that's coming, via almost insolvent FHA and Ginnie Mae, both of which are fully backed by the US government (i.e. taxpayers).
Goldman Sachs civil and criminal charges
How can they be blamed for what everyone else was doing? By the way, according to Goldman, today's job number was going to be 700K. I guess they were just following the Obama administration's lead (that Friday's job number would be great). How can they be blamed for following Obama?
Audit the Fed
Senator Sanders blinked and watered down his bill in the last minutes to just a slap on the wrist, if that. He blinked on the day of 'flash crash'. Oh it's just a coincidence, isn't it?
'Flash crash' and (unwanted) attention on high frequency trading
Boy this story disappeared so quick. Nothing to see here (which is very true of the stock market - nothing is supporting it but algo bots working in milliseconds), move right along. Nonetheless, the SEC is implementing a new circuit breaker system starting next week, which I suspect will only benefit the high frequency traders more. (More on this later.)
Euro crisis and $1 trillion bailout plan
Remember this? It was announced on May 10 before the markets in Asia opened. The effect of the announcement lasted about 12 hours for euro. The currency closed at about 1.28 (against USD) on May 10. It closed today at 1.1964, the level last reached in 2006, despite incessant central bank intervention in the last 3 weeks.
.
North Korea's threat to go on all-out attack
I think it made the headline for a day or two. Poor Kim Jong Il, upstaged by the Israeli navy commandos only days later.
This must be the "new normal", in which one crisis every few days makes a peaceful, easy week. We would only panic when we have more than 3 or 4 reported crises per day. If they are not reported by MSM, we don't care, do we?
Move along, nothing to see here.
Better than nothing, I suppose.
With the Vitter amendment which called for wider, continuous audit defeated earlier, the Senate unanimously voted for the Sanders amendment which had been watered down to only a one-time audit of the Fed's emergency lending programs between December 2007 and the date of the bill's enactment. Senator Sanders apparently buckled under pressure.
The audit wouldn't be for anything else, and one time only. And this is exactly what Ben Bernanke, the Fed chairman, has said he would support. I guess the ex-Enron lobbyist that the Fed hired has been successful.
Senate Votes to Audit Fed Emergency Steps, Rejects Wider Probe
(5/11/2010 Bloomberg)
"May 11 (Bloomberg) -- The Senate approved an amendment to the regulatory-overhaul bill authorizing a one-time audit of the Federal Reserve’s emergency-lending programs, and defeated a second proposal that would have allowed continuous inquiries.
"Lawmakers voted 96-0 today for Senator Bernard Sanders’s proposal to let a congressional watchdog conduct an audit of every Fed emergency action since December 2007. The Senate rejected a measure from Louisiana Republican David Vitter that would have permitted unlimited reviews.
"The Sanders amendment is closer to what Federal Reserve Chairman Ben S. Bernanke told legislators he would support. The Fed chief, during a February hearing, invited an audit of emergency loan programs, while raising concerns that broader audit authority could result in reviews of monetary policy.
"“The Sanders amendment gives perfect political cover to senators who are eager to punish the Fed for its secrecy and forays into fiscal policy, but are not eager to take any blame for intervening in the Fed’s setting of interest rates,” said Sarah Binder, a senior fellow at the Brookings Institution.
"Sanders last week narrowed his amendment in response to concerns raised by Bernanke, the Treasury Department and senators that his call for broader audit could threaten the central bank’s independence. The change drew support from Senate Banking Committee Chairman Christopher Dodd, the Connecticut Democrat who wrote the main financial-regulation bill.
"‘Lobbying Power’
"“There was a tremendous amount of lobbying power placed on senators” to avoid audits of monetary policy, said Mark Calabria, director of financial regulation studies at the Cato Institute and a former Senate Banking Committee staff member. “Dodd wasn’t in favor of it, the White House wasn’t in favor of it, and Treasury was absolutely opposed to it.”" [Emphasis is mine. The article continues.]
to be exact, against the bill that contains his own amendment.
Ron Paul votes against his own amendment
(Robert Rule, 12/11/09 Examiner.com San Francisco) [emphasis is mine]
"Congressman Ron Paul (R Texas) is the last true statesman. Want proof, the Congressman and 2008 Presidential candidate fought more than twenty years to finally create an amendment to fully audit the Federal Reserve, which is the main cause of the present financial crisis.
"The Audit the Fed bill was accepted as an amendment to a larger bill, the Wall Street Regulatory Overhaul. Even though the congressman’s bill was attached he could not in good faith vote for the larger legislation. Imagine a country full of men like that. Imagine just having 100 representatives like that.
"The legislation will now go to the Senate for a vote. Ron Paul said “I have no clout in Congress, it was the people (grass roots) who made this happen.” A good guess would be that the Senate will try to take this amendment out. Reportedly, Senator’s are a little closer to those at the Fed than Congressman. It will be up to the people once again to make sure this amendment sticks if the larger bill is passed." (The article continues.)
I had suspected that Dr. Paul would do exactly what he just did. In good conscience he couldn't have voted for the larger bill, H.R. 4173 "The Wall Street Reform and Consumer Protection Act of 2009", which will create another federal bureaucratic monstrosity called Consumer Financial Protection Agency and will give the federal government unprecedented authority to seize a private entity which it deems to be of a threat to the greater economy, even before the threat becomes real. And of course that "threat" is defined by the government.
Sound familiar to you? It should, because that's the Bush doctrine of preemptive strike even if the threat is not there. All this government needs is a possibility of a threat that it may jeopardize the system sometime in the indeterminate future.
Are we entering the Greater Depression, contrary to what Obama said ("we avoided the depression" he averred the other day), where the government is set to control every single aspect of our economic life to "save us from ourselves", so to speak? From our capitalist mentality that a free market gives us prosperity, from our (dwindling majority, maybe) deeply ingrained belief that we can pull ourselves up by our bootstraps?
that pose a risk to the economy.
The House Financial Services Committee (chair: Barney Frank) has approved the legislation, by 31-27, that would give the government the power to dismantle financial firms that it thinks pose a risk to the economy, even if they are healthy. It will also force big financial firms to pay the fees upfront for dismantling.
The question here is: WHO IS TO DECIDE, AND HOW? HOW IS 'RISK' DEFINED? BY WHOM?
By Timmy Geithner and Ben Bernanke, who didn't see anything bad coming their way? Or Barney Frank who insisted Fannie Mae and Freddie Mac were sound businesses? Or Chris Dodd who was a "friend of Angelo"? Or another Presidential Task Force headed by an ex-banker supported by ex-campaign staff?
As this is part of so-called financial overhaul attempt by the government, it also contains the audit of the Federal Reserve.
Panel OKs key regulatory measure; House vote next
(12/2/09 AP via Yahoo Finance) [emphasis is mine]
"WASHINGTON (AP) -- A key House panel voted Wednesday to slap new restraints on big Wall Street institutions and to demand greater openness from the nation's central bank, clearing a significant hurdle in the drive for a sweeping financial regulations overhaul.
"Motivated by the crisis that caused a near collapse in financial markets, the House Financial Services Committee approved legislation 31-27 that would give the government the right to dismantle financial firms that pose a risk to the economy, even if they are healthy.
"The legislation also would require a detailed congressional audit of the privacy-shrouded Federal Reserve and would assess fees up front on large financial institutions to pay for the failure of their competitors.
"The action sets the stage for a full House vote next week on comprehensive regulatory changes meant as a response to the financial sector's meltdown more than a year ago. That package, set to go to the House floor on Wednesday, would include the creation of a new consumer finance protection agency, restrictions on complex financial instruments blamed for feeding last year's panic and restrictions on Wall Street compensation."
Why don't we, citizens, have the right to dismantle institutions that pose a risk to the economy? The first on my list would be the Federal Reserve, IRS next, and then dismantle the entire federal government, as the biggest risk to the economy and liberty and welfare of the citizens.
Read the post on 30-day makeover of the U.S. by Lew Rockwell.
Ron Paul already said his bill "has been gutted", thanks to Mel.
Bloomberg reports that Barney Frank's committee (House Financial Services Committee) will take up "Fed audit proposals". The article isn't quite clear on what exactly will be taken up, but it looks like the amendment by North Carolina Democrat Mel Watt, which Texas Republican Ron Paul has said "has gutted" his proposal, H.R. 1207 (which has wide bipartisan support of 310 co-sponsors in the 435-member House).
Huffington Post is more explicit, and surprisingly forthcoming in denouncing the Watt amendment:
Audit The Fed Effort Under Threat in House
(Ryan Grim, 11/17/2009 Huffington Post)
"A bipartisan effort to force transparency on the Federal Reserve is suddenly in jeopardy after a House Financial Services Committee member introduced an amendment that would let the multi-trillion dollar organization continue throwing tax dollars around in secret.
"Rep. Mel Watt, a Democrat from North Carolina, has introduced an amendment intended as an alternative to the measure to audit the Federal Reserve introduced by Reps. Ron Paul (R-Texas) and Alan Grayson's (D-Fla.) . But instead of increasing transparency, as the amendment claims to do, Watt's measure would instead make the institution more opaque."
The article has a link to Watt's amendment, which I reproduce here.
According to the article, Representative Watt, whose district is a home to one of the largest recipients of the Fed bailout money (Bank of America), has said that his amendment will provide unprecedented transparency. But the writer of the article doesn't buy that argument:
"In fact, the critics are conceding no such thing. "The Watt Amendment, as written today, actually places new restrictions on the little authority that exists, such as it is, for independent auditing of the Fed," Grayson said. "It keeps in place all existing restrictions and adds four more. So I don't see why anybody would reasonably think that it creates unprecedented authority to audit the Fed."
"The devil, as always, is in the details. While Watt's amendment talks a big game about opening up the Fed to a complete audit, all of the new powers granted must be carried out "each case in accordance with subsections (b) and (e)."
"Those subsections of the current law delineate the many restrictions that an auditor confronts when seeking to audit the Fed. Watt's measure not only leaves those in place but requires all audits to abide by them.
"And in addition to the current restrictions in place, it creates new ones. An auditor could not look at loans or liquidity arrangements the Fed enters into, the terms of those arrangements, or the effect of those loans and other liquidity deals on "reserves, the balance sheet or financial condition of a Federal reserve bank or the Federal Reserve System."
Florida Representative Grayson is downright sarcastic:
""The new exemptions are described as limited but they are extremely broad," Grayson said. They're so broad, in fact, that there would be very little left for an auditor to look into. What could an auditor check up on?
""Count the pencils on the desks," Grayson speculated. "Perhaps check on proper Metro card usage.""
I want to add two problems I see regarding "Audit the Fed".
First, the Federal Reserve is audited, contrary to the claim otherwise, by one of the large accounting firms (Deloitte & Touche). So, those people demanding the audit because "it's never been done" are showing their ignorance.
Second, the root problem seems to me to be the fact that the Federal Reserve doesn't do their books like other banks, corporations, or even non-profit organizations. The Federal Reserve has its own uique set of rules that it has developed, and does not follow GAAP (Generally Accepted Accounting Principle). If you look at the audit report, it is full of exceptions because of the Federal Reserve's unique status as policy-setting institution. Here's from the Deloitte & Touche's audit report for 2008:
Accounting principles for entities with the unique powers and responsibilities of a nation's central bank have not been formulated by accounting standard-setting bodies. The Board of Governors has developed specialized accounting principles and practices that it considers to be appropriate for the nature and function of a central bank.
Differences exist between the accounting principles and practices in the FAM andIn my personal opinion, Ron Paul's bill should have first demanded that the independent third party do the accounting and produce the balance sheet, income statement, and all the supplemental statements just like they are required for banks and corporations, then do the audit based on that information.
generally accepted accounting principles in the United States ("GAAP"), primarily due to the unique nature of the Reserve Banks’ powers and responsibilities as part of the nation’s central bank.
Texas Congressman Ron Paul on CNBC Squawk Box, on financial regulations and the Federal Reserve audit.
by Mel Watt (D, NC). What a surprise.
Federal Reserve Policy Audit Legislation ‘Gutted,’ Paul Says
(Bob Ivry, 10/30/09 Bloomberg) [emphasis is mine]
"Oct. 30 (Bloomberg) -- Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been “gutted” while moving toward a possible vote in the Democratic-controlled House.
"The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today.
"“There’s nothing left, it’s been gutted,” he said in a telephone interview. “This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that.” "
"Paul, a member of the House Financial Services Committee, said Mel Watt, a Democrat from North Carolina, has eliminated “just about everything” while preparing the legislation for formal consideration. Watt is chairman of the panel’s domestic monetary policy and technology subcommittee."
"Paul said he intends to introduce an amendment to the bill when it comes to the House floor for a vote restoring the legislation’s original language."
Mr. Watt's district includes Charlotte, NC, where Bank of America, the largest lender in the U.S., is headquartered, as noted by the article.
If you are in Mr. Watt's district, or Chairman Frank's district and want to know what on earth the Federal Reserve has been doing with your money and a whole lot of others, PLEASE write to them and tell them they must restore the original bill as introduced by Ron Paul.
on September 25, 2009. Historic, as Barney Frank says.
Here's the link to yesterday's entire full-committee hearing of H.R. 1207 in House Financial Services Committee.
http://www.house.gov/apps/list/hearing/financialsvcs_dem/fchr_092509.shtml
I was impressed with the disciplined way that Chairman Barney Frank ran his committee when I was watching part of the hearing, but I now have some respect for him (which it hardly existed in me before) after hearing his opening remark. I missed it yesterday, as I caught only the last hour or so of the hearing.
Barney Frank started off by saying "This is a historic hearing." He noted that Ron Paul first filed this bill for the first time in 1983, and 12 years that the Republican Party control the agenda of the Committee they found no time for the hearing . He was pleased, in the show of bipartisanship, to be the one to give this important piece of legislation its first hearing ever.
Frank went on to state that the openness and transparency issue with the Federal Reserve was a bipartisan issue, and was not new; in fact, under Chairman Gonzales in 1983, the Committee succeeded in making the Federal Reserve more open. At that time, the meetings of FOMC were kept secret. The Federal Reserve denied even the existence of the minutes of the meetings, which happened to be found later in a drawer, Frank remarked.
Also (and that's where he gained my respect), he said in 2003 Ron Paul had been slated to be the chairman of the Domestic Monetary Policy Subcommittee, and that subcommittee immediately disappeared. It was merged into the International Monetary Policy Subcommittee. "There were people who wanted to shield the Federal Reserve from Mr. Paul's influence," Frank said.
Before he yielded to Ron Paul for his opening remarks, Frank expressed his concerns in proceeding with the legislation, which he had already expressed previously; that he didn't want to make the disclosure of the audit results interfere with the market in any way, and wouldn't want to allow any party from profiting from the Fed's moves (buying and selling in the financial market).
Well, many think that's been happening already anyway for quite a long time. He doesn't need to worry about that aspect, because that's what many large, influential financial institutions have already been successful in anticipating the Fed's moves and profiting from it, with or without insider knowledge.
I would love to know (on top of my head, for no particular order):
"Has the Fed tried to manipulate the stock market?"
Rep. Grayson made the Fed general counsel very uncomfortable in today's historic hearing.
(Latest at the top)
Hearing over. But Mr. Woods, that microphone is still live.
Rep. Royce: We're compounding the boom-bust cycle.
Mr. Woods: The Federal Reserve creates "moral hazard" because it can create money as much as they want. Why equity ratio is so low in the financial industry? Because they have the lender of last resort [the Federal Reserve].
Rep. Royce is citing the Richmond Fed's study that 40% of bad assets is backed by the Fed (?), and mentions "moral hazard".
Rep. Brad Sherman is asking about the loans that the Fed has extended and which the Fed hasn't disclosed the detail of the loans. Handing out risky loans on the concessionary term and tell the public "don't worry" doesn't seem like a good way.
Rep. Michele Bachmann is for tightening the scope of the Fed operation.
Someone was showing a U.S. dollar bill right behind Mr. Woods, and Rep. Watt and Chairman Frank told him to stop.
Chairman Frank is asking if the [audit] information should be made public instantaneously.
Rep. Ron Paul again.
Rep. Melvin Watt is insisting if Mr. Woods distinguish between the policy audit and the audit (opening the book), and saying the discussion is not of any substance.
Thomas Woods: we don't support any watered-down version of the bill. It would be the dignified way for the Fed if they simply accept the audit. Otherwise, people would increasingly wonder what the Fed may be hiding.
(Latest at the top)
Thomas Woods of Ludwig von Mises Institute is the other witness.
Mr. Alvarez is done. The other witness is taking the seat.
Rep. Donald Manzullo is asking whether the Fed is monetizing money for helping companies like AIG.
Rep. Adam Putnam is listing off the items NOT disclosed about the Fed's operations and asking why.
Oh my goodness. This Californian Congressman (Rep. Edward Royce) cites Ludwig von Mises! [First I ever heard anyone other than Ron Paul cite von Mises.] The general counsel was saved by the Chairman Frank from answering the questions and embarrassing himself.
Rep. Alan Grayson made Mr. Alvarez, general counsel of the Board of Governors of the Fed, squirm, insisting to know whether the Fed has been manipulating the stock market and who specifically has been doing it.
Rep. Ron Paul asked about the potential Fed's manipulation in the gold market, and currency swaps with foreign central banks.
Ron Paul's H.R. 1207 is being heard in the House Committee on Financial Services, thanks to Barney Frank. It's a historical day, regardless of whether the bill will pass. 96 years after the Federal Reserve System came into being, Congress is finally debating whether to audit the institution that wields enormous power over the nation's financial and economic policies. It's about time.
You can watch the hearings on the Committee's website.
(By the way, the member of the Federal Reserve Board, who wrote the op-ed piece for Wall Street Journal to coincide with this occasion, was a member of the Working Group on Financial Markets , aka the Plunge Protection Team.)
Why now? Inquiring mind wants to know.
Kevin M. Warsh is a 39-year-old former VP of Morgan Stanley and a current member of the Board of Governors of the Federal Reserve. He wrote an op-ed piece for Wall Street Journal, which was posted on September 24 for September 25 publication.
It is hard to believe he is 39 years old, for he writes as enigmatically as 83-year-old Alan Greenspan speaks (or used to speak).
The Fed's Job Is Only Half Over
(Kevin M. Warsh, 9/25/09 Wall Street Journal)
"Recent media stories have chronicled in great detail the events of the last couple of years. A pair of conclusions might be fairly drawn from these early drafts of history. One is that the financial-market turmoil of the last year proved to be of significant consequence to the economy. The second is that the Federal Reserve distinguished itself from historical analogues by taking extraordinary actions to address risks to the economy. Commentators, however, tend to disagree as to whether the extraordinary actions undertaken were to the good or the detriment of the U.S. economy in the long-run."
With this not so attention-grabbing opening, he drools on about how the Federal Reserve has done a good job but that this is no time to "declare victory". And I'm thinking "OK, what is your point?"
Then, he delivers, sort of, one of the points [emphasis is mine]:
"It is unwise to prejudge the Federal Reserve's policy strategy—or to declare the victor or the vanquished—by the split time, however notable it might be. We are at a critical transition period, of still unknown duration, and we must prepare diligently for an uneven road race ahead. If policy is not implemented with skill and force and some sense of proportionality, the success of the overall endeavor could suffer."
He seems to me to be saying, in crude language, "Don't ask questions. Leave it us, or you will suffer a consequence of your meddling."
Then he mentions "policy makers". At first, I thought he means legislators. But as I read the article, I now think he means "policy makers" at the Federal Reserve, because he starts to talk in first person.
"It also means that policy makers should acknowledge the heightened costs of policy error. The stakes are high, in part, because the policy accommodation that requires timely removal as the economy rebounds is substantial. And our policy judgments will ultimately prove worthy of the accolades, and tender the ultimate rejoinder to our critics, if we rise to meet this heightened responsibility. I am confident we will."
Tender the ultimate rejoinder to our critics? (He talks like Edward IV or his brother Richard III, last king of the House of York.) Is he challenging the supporters of H.R. 1207 (audit the Fed), which is slated to be introduced in the House Financial Services Committee on September 25?
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