Federal Reserve losing control

[elfismiles]

Court Orders Federal Reserve to Disclose Emergency Loan Details

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By Mark Pittman

Aug. 25 (Bloomberg) -- The Federal Reserve must for the first time identify the companies in its emergency lending programs after losing a Freedom of Information Act lawsuit.

Manhattan Chief U.S. District Judge Loretta Preska ruled against the central bank yesterday, rejecting the argument that loan records aren’t covered by the law because their disclosure would harm borrowers’ competitive positions.

The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under 11 programs, most put in place during the deepest financial crisis since the Great Depression, saying that doing so might set off a run by depositors and unsettle shareholders. Bloomberg LP, the New York-based company majority-owned by Mayor Michael Bloomberg, sued on Nov. 7 on behalf of its Bloomberg News unit.

“The Federal Reserve has to be accountable for the decisions that it makes,” said Representative Alan Grayson, a Florida Democrat on the House Financial Services Committee, after Preska’s ruling. “It’s one thing to say that the Federal Reserve is an independent institution. It’s another thing to say that it can keep us all in the dark.”

The judge said the central bank “improperly withheld agency records” by “conducting an inadequate search” after Bloomberg News reporters filed a request under the information act. She gave the Fed five days to turn over documents it told the reporters it located, including 231 pages of reports, and said it must look for more at the Federal Reserve Bank of New York, which runs most of the loan programs.

‘Involuntary Investor’

The central bank “essentially speculates on how a borrower might enter a downward spiral of financial instability if its participation in the Federal Reserve lending programs were to be disclosed,” Preska wrote. “Conjecture, without evidence of imminent harm, simply fails to meet the Board’s burden” of proof.

David Skidmore, a Fed spokesman who said the board’s staff was reviewing the 47-page ruling, declined to comment on whether the central bank would appeal.

Bloomberg said in the suit that U.S. taxpayers need to know the terms of Fed lending because the public became an “involuntary investor” in the nation’s banks as the financial crisis deepened and the government began shoring up companies with capital injections and loans. Citigroup Inc. and American International Group Inc. are among those who have said they accepted Fed loans.

‘Public Interest’

“When an unprecedented amount of taxpayer dollars were lent to financial institutions in unprecedented ways and the Federal Reserve refused to make public any of the details of its extraordinary lending, Bloomberg News asked the court why U.S. citizens don’t have the right to know,” said Matthew Winkler, the editor-in-chief of Bloomberg News. “We’re gratified the court is defending the public’s right to know what is being done in the public interest.”

The Fed’s balance sheet about doubled after lending standards were relaxed in the wake of the collapse of Lehman Brothers Holdings Inc. on Sept. 15, 2008. For the week ended Aug. 19, Fed assets rose 2.3 percent to $2.06 trillion as it continued to buy mortgage-backed securities under a program allowing the central bank to purchase non-government securities for the first time.

The U.S. House may vote as soon as next month on a bill to require the Fed to submit to audits by the Government Accountability Office, said Representative Scott Garrett, a New Jersey Republican on the Financial Services Committee.

‘Wake-Up Call’

The judge’s ruling “is strikingly good news,” Garrett said. “This is what the American people have been asking for.”

The Freedom of Information Act obliges federal agencies to make government documents available to the press and public. The Bloomberg suit, filed in New York, didn’t seek money damages.

“The public deserves to know what’s being done with the money,” said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press. “This ought to be a wake-up call for the public that they need to be far more educated about this.”

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Mark Pittman in New York at mpittman@bloomberg.net

Last Updated: August 25, 2009 01:11 EDT
http://www.bloomberg.com/apps/news?pid= ... C61ZsieV4#

[JackRiddler]

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This classic has been mentioned a couple of times recently so let's just give it a kick to let newer readers have a look...

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[ninakat]

Time for another bump.

[NeonLX]

Now what happens?

[dqueue]

I have nothing real to add, but what a weird 24-hour period. Hell, it's probably more like 12-hours.

Wednesday brought news of 'serious deliberations' on the Fed providing more 'easing' to the US economy. Then, commentators Thursday said strong economic indicators negated the need for more 'easing'. The Fed deliberations were weeks ago, when things were bad. Point, counter-point in less than 24-hours.

[ninakat]

But everything is going to be fine. May God Bless the United States of America.

John Mauldin - This Is Going To Shock The World

. . . “As it turns out, we have found so much natural gas and oil in this country, with the new procedures and the new technology, that we can become energy independent in less than ten years, maybe even by the end of the decade.

If we start exporting natural gas, which we will in less than four years, from McAllen Texas there will be the first LNG terminal, just the one in McAllen is going to produce $70 to $80 billion a year of positive trade balance.

If we start exporting value-added natural gas, in the form of fertilizers and plastics and other products that you make from natural gas, we could have a positive trade balance in less than ten years. That would be a shock to the world. Nobody sees that coming.

That would make the dollar so remarkably strong, when combined with the balanced budget, that we would actually deserve to be the reserve currency again. America could be the America that we all think that it should be in our mind, that we would like it to be.

I think the choice is between America becoming America, what we think of as America, in our hearts, what we want America to be, or we become Italy or Spain. I want to be the America that I grew up with in my mind. I think America really could have our finest years in front of us again.

It’s going to allow our dollar to become strong enough that we can invest overseas with true income producing assets. That’s the choice we have in front of us, and I like to think we will make the right choice. If we screw it up again (and go the way of Italy and Spain), then, well, it’s going to be a tough time for my kids and for a lot of us.”

[ninakat]

Obama's great gamble is expending great wealth in anticipation of a recovery, and subsequently taxing the aristocracy to return wealth to the working class.

Believe that at your own peril. First, you have to believe that Obama is a representative of the people, not the aristocracy. Second, you have to believe that Obama expects a real recovery (i.e. that he doesn't have a clue about where the economy is actually heading -- that'll be "the incompetence theory" after the SHTF). Third, you have to believe that he's actually planning on taking from the rich and giving to the poor, not just giving the idea lip service.

That's an awful lot of blind faith, none of it based in fact.

Why believe otherwise? Pessimism is wallowing in self loathing and defeat. I choose to believe that Obama is a real square fellow, and that he is as he presents himself . . . dedicated, intelligent, concerned, introspective, and capable. He is also a politician of the Chicago school, so he knows his way around in a fight. I like that.

I'm sure he knows the risks of his plan . . . but it is the only plan he can enact, given the structure of Congress and the pettiness of the media. It's his best shot.

First, he may not expect a real recovery, but it would be foolish to act in any other way. No recovery, no sense in doing anything at all. Right?

And, speaking of "blind faith not based upon fact," are you not operating from the same platform, but even more so? You are, perhaps, to enmeshed in pessimism; are you one that longs for catastrophe so that everyone can share in your misery?

[ninakat]

QE3: Helicopter Ben Bernanke Unleashes An All-Out Attack On The U.S. Dollar
September 13, 2012
The Economic Collapse Blog

+ + +

As Predicted, Bernanke Launches QE3 to Help the Big Banks … Which Will Destroy the Economy
September 13, 2012
George Washington's Blog

+ + +

“Unlimited QE3” Quick Analysis
Federal Reserve Attacks US Dollar, Risks Currency Warfare
09/14/2012
By Daniel Amerman CFA

[ninakat]

Marc Faber: "Fed Will Destroy The World"
09/14/2012, Zero Hedge

"Everything will collapse" is the consequence Gloom, Boom, & Doom's Marc Faber sees from the Fed's latest 'stimulus' (and the fallacy and misconception of how money-printing can help employment). In a wondrously clarifying interview on Bloomberg TV this morning, Faber explained why he was 'happy', since "the asset values of his holdings will go up" but as a responsible citizen he is worried because "the monetary policies of the US will destroy the world." It truly is class warfare under a veil of 'its good for you' as he notes: "the fallacy of monetary policy in the U.S. is to believe this money will go to the man on the street. It won't. It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols." Congratulations, Mr. Bernanke.

Must-watch (or read the transcript) - it is truly remarkable.

*** see link above for video ***

(article continues)

[jingofever]

Were the same doomsday predictions made about QE2? I don't know but suspect they were. Probably with QE1 too. I am not saying whether these policies are good or bad, because I am clueless about this stuff, but I always see these people warning of an apocalypse. Are they onto something or are they cranks?

[slimmouse]

Were the same doomsday predictions made about QE2? I don't know but suspect they were. Probably with QE1 too. I am not saying whether these policies are good or bad, because I am clueless about this stuff, but I always see these people warning of an apocalypse. Are they onto something or are they cranks?

Ultimately, Im kinda naieve on all of this too. Possibly, all we are expected to imagine is that this printing of billions of dollars, is going into the pockets of the usual suspects simply by way of due compensation, for the failed payments back to the system by the defaulting proles, who have let us all down.

The problem with this explaination is that the sums are so vast, its hard to imagine so many defaulting proles derivng any kind of benefit whatsoever from their default. To the best of my knowledge most of them are now living in tents, or sharing accomodation with close family and friends.

So, given that prole failure/ responsibility is almost certainly NOT the case, then the likely aim of all this "quantative easing", is bailing out the various financial institutions, who have lost most of this money in their big roulette game with fellow institutions, in the form of derivative swaps on any number of truly bizarre "products", such as weather predictions !

They get the double bonus of non liability for their game, which also ensures that the winners get paid, along with cash payments for properties and businesses formerly owned by the proles, whose assets they now hold title too.

All this of course to be paid by the future labour of fellow proles. Nice work if you can get it, I guess

[hanshan]

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This classic has been mentioned a couple of times recently so let's just give it a kick to let newer readers have a look...

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bump


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[ninakat]

Were the same doomsday predictions made about QE2? I don't know but suspect they were. Probably with QE1 too. I am not saying whether these policies are good or bad, because I am clueless about this stuff, but I always see these people warning of an apocalypse. Are they onto something or are they cranks?

These policies are bad because they essentially steal from the citizenry and line the pockets of the bankers and the other 1%'ers. QE (quantitative easing, or money printing) is like a snake eating its tail -- i.e. the Fed is buying U.S. treasuries in order to keep the ship from sinking short-term. The end result is a dilution of the money supply which creates inflation, which is essentially a stealth tax. Some people, like John Williams of Shadowstats.com are expecting hyperinflation by 2014. Think of fiat currencies (which is all the developed world uses now) as a giant long-term ponzi scheme, destined to fail by design.

That's why hard assets are the best hedge against inflation, because they're less likely to lose value as the system disintegrates. And it will, it's just a question of when, but I believe it could be relatively soon (6 months to 2 years).

[justdrew]

Gerald Celente is some kind of a monster though

I don't know about QE causing inflation, in this case. It's just making up for money sucked out of the "real" economy and moved into the unproductive non-circulating FIRE economy, isn't it?

[Nordic]

Broad strokes: The Fed is now, in effect, counterfeiting trillions of dollars, and handing it to Wall Street to do with it as they wish.

This is supposed to stimulate the economy. Ha.

What the Wall Streeters do, though, is put the money away in private, off-shore accounts. They're hoarding it. So it doesn't go anywhere.

If they really wanted to stimulate the economy, they would simply give this counterfeited money to the people who would actually spend it. You know, regular folks.

And they know this. Which makes me think the goal isn't to stimulate the economy at all, but rather to just hand out trillions to their buddies so they can all chortle about the stock market going up as they store the ill-gotten tons of gold into the Gringott's vaults (yes, I think of everything in terms of Harry Potter these days).

These people are just evil fucking bastards. They don't care what consequences their actions have for anybody else. And they can never get enough money. Shit, pretty soon they'll have to start building new islands with new banks on them, the coffers at the existing ones are getting so stuffed full of money.

Fuck them. Bring back the guillotine.

Here's a juicy quote for you, by Henry Ford:

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. "