So, you know about the Treasury's $700 billion bailout plan. But you probably don't know that the Federal Reserve has lent out about $2 trillion since September. Few do. And that is what's irritating bulldog Congressman Alan Grayson.
Comments from Registered Members | (Register or log in to make your comment.) | bpmca 2009-02-06
While good points have been made in these comments, I think that some people are projecting motive or a lack of basic knowledge by the Congressman. I get the feeling he knows exactly the answers to his questions before he asks them, but this makes his questions no less pointed. Lawyers do this routinely to great affect. Taxpayers and future taxpayers have every right to know to which institution their hard earned money is going to, and since we are talking about institutional lending no infringement of personal privacy is at stake here. Equating large institutional lending with a personal loan is just silly, unless you think corporations deserve the same liberties as individuals. | pwmackay 2009-02-03
There is not a single 'spin' respone to this Congressman's questions that can hide the fact that the American people have the right to know who the Fed is lending this money to. The man on the street didn't create this disaster, the banks and lending institutions did and we are supposed to simply ask no questions, panpiper are you serious? | DJ2008 2009-02-02
Jordan, the money printing actions of the Fed will hurt the global standing of the dollar to the point where it will be abandoned abroad (yes, despite acute short term effects upon foreigners). Asians are already cutting back on purchasing Treasuries, thereby causing the Fed to buy them (i.e. 'Monetizing the debt'), which is the gross equivalent of fiscal cannibalism. No nation in history has salvaged itself from Himalayan-sized fiscal constraints by printing money, and we won't either. Your, and panpiper's trust in the (technically illegal) Federal Reserve system is catastrophically misplaced. | DJ2008 2009-02-02
Panpiper, you are either clueless, are obfuscating facts, or both. The Fed cannot spark demand under the scenario of systemic deflation by printing money. Keynes called it 'pushing on a string', and that is exactly what is happening, considering that all the invented digital money in the world that the Fed has generated hasn't gotten financial institutions to lend again. This is a credit crisis that cannot be fought with excessive liquidity, and the Fed will drive this nation to the realms of what the German Bundesbank did in 1923 - hyperinflation (especially when money *exits* Treasuries for safer havens). Quit equating monetary history and viable perspectives with 'conspiracy theory', and troll somewhere else. | jordan 2009-02-02
Pappiper is generally right, and the ignorance of Congressman Grayson about the workings of the financial system is scary. The Federal Reserve is doing just what it is there for: providing liquidity to the financial system at a time of crisis. The money supply is imploding due to the staggering write-offs being taken by the banking system, and the fed is replacing this disappearing debt-money with its own, real dollars. The vast expansion of the fed's assets paid for through created money will result in a windfall profit for the Treasury when the Fed remits the net interest it earns on these new assets at the end of the year. Even if some of the assets purchased prove worthless, the losses will be paid for by a reduction in Fed remittances, not through taxes. The current crisis would have been largely avoided had the Fed previously provided a much larger proportion of the money supply and required the financial sector to hold much higher reserves of real money. Hopefully we have learn | ned.delaney 2009-02-01
Which is just one of the spin offs from the Bush administration: secret committees and no accountability. | benfmo 2009-02-01
I want to know who was given this money. It time to end the Feds. I dont work and It aint working now. | Christopher93 2009-02-01
Those of you who claim that the Fed does not lend taxpayers' money, you are forgetting the Inflation Tax.
Every time the Fed creates credit, that action devalues every single other US dollar in circulation. This devaluation is known as the Inflation Tax. When new US currency is "created" its value is literally taken from every single US dollar in existence.
So when the Fed is wildly printing and loaning money at 0% interest, devaluing the wealth of every single person who holds US dollars, then these US "taxpayers" (not just US citizens, but everyone who holds US dollars) has a right to know why and where their money is being spent. | panpiper 2009-02-01
Frankly this congressman thinks he's doing something right, but the nature of his questions reveals that he has absolutely no idea what the fed does or why it does it. He is a 'freshman' and it shows. Congress does not have 'oversight' on the specific lending details of the fed precisely because politics is to be kept out of it. It was part of the original intent, created by congress itself, to keep the fed free from micromanagement by politically motivated people subject to graft and all the other failings of being human. | panpiper 2009-02-01
It is not 'the tax payer's money' that is being 'spent'. Rather people are monetizing collateral. The theory is that if you've managed to create some asset (built a building, whatever), that you should have the right and ability to turn it into cash in hand, so you can go out and build another asset. The fed literally invents this money, it is created out of thin air, it is not taxed. | panpiper 2009-02-01
Does this congressman have the right to know the name and address of every single individual who wishes to avail themselves of credit? Why, so he can approve or veto your loan application himself? So his political interests can get involved in your decisions? In essence, this is what he is demanding. | panpiper 2009-02-01
The fed basically manipulates the money supply by playing with interest rates. In hard times the fed lowers interest rates to encourage people to borrow, which increases the money supply and supposedly increases demand, thereby stimulating the economy. The interest is paid back to the fed which has a tightly controlled process for what it does with this money and if it exceeds the fed's operating expenses, it is paid to the US treasury. | panpiper 2009-02-01
The fed was created as an entity independent of the political process, specifically to prevent politics from entering into lending decisions. Should we have the right to know that the fed lent your bank money because of what you wanted to get a loan for? There is a lot of conspiracy nonsense out there about the fed that drives people into a rage against it. They are right to rage against it, but not for the reasons they think. | panpiper 2009-02-01
Simply 'inventing' money out of thin air is NOT a good idea. But the fed was created specifically to do this and this notion that playing with the quantity and therefor value of money is a 'good' thing is at the heart of our current financial crisis (not to mention most of the other similar crises). Printing more money lowers the value of the existing money that is in the system. So the money that 'you' have is now worth less. It is an 'inflation' tax that hurts the poorest most. | chordchaser 2009-02-01
Despite the obscene perversion of facts and of history being broadcast and printed in the news every day, and especially in these last few days, I think there is in this crisis a silver lining. As we hurtle towards yet another "new administration" in Washington that refuses even to debate reality, events have overtaken them.
Milton Friedman observed that the electorate are generally so uninformed they are incapable of discerning lies from truth, and politicians use this to control the debate. They are able to focus on issues and ideas which have little meaning, but give rise to emotion, and often to deep-seated fears.
This is why we have the overriding "we mustn't let the other side win, because they are so bad" mentality. This is the sad truth of our elections; they are based on keeping the bad guys from winning instead of on reality. Emotional reaction instead of reflective thought.
However, Friedman also noted that during times of extreme crisis some people begin to l |
Fed lends two trillion without oversight By Danielle IvoryVOICEOVER: Just in case you thought $700 billion was a lot of money, get a load of this. January 13, 2009Washington, DCHouse Financial Services CommitteeREP. ALAN GRAYSON (D-FL): Mr. Kohn, how much has the balance sheet of the Federal Reserve increased since September 1?DONALD KOHN, VICE CHAIRMAN OF THE FEDERAL RESERVE: It's increased from around $800 billion to about $2 trillion.VOICEOVER: That's $2 trillion on top of the money being lent out by the Treasury. Lent out to whom, you ask? Well, that is a secret.GRAYSON: And what was that money spent on? KOHN: That money was lent to banks, investment banks.VOICEOVER: This is Donald Kohn. He's the vice chairman of the Federal Reserve. At a hearing on the Hill, he was reluctant to go into detail about the Fed's recent lending.KOHN: It wasn't spent; it was lent.GRAYSON: Which institutions received it? And how much for each institution?KOHN: I don't know which institutions, which specific institutions received it.~~~VOICEOVER: This is the guy who was asking the surprisingly tough questions. Meet new congressman Alan Grayson.GRAYSON: Yeah, sure. I'm a freshman. What do I know? I guess I haven't gotten the memo on questions not to ask and people not to question closely.VOICEOVER: He literally just moved to Washington, and already he's making the Federal Reserve uncomfortable.~~~GRAYSON: Mr. Kohn, you just said that $1.2 trillion has been lent or spent, as the case may be. That's $4,000 for every man, woman, and child in this country. Don't Americans have the right to know how you spent that money?KOHN: Yes, they have every right to know the purposes for which we spent it, the types of lending that's going on, the types of collateral we're taking, and what we expect to accomplish with that.~~~VOICEOVER: But apparently, according to the Fed, Americans do not have the right to know who got the money and how much. And while Congress has been concentrating on Treasury Secretary Henry Paulson's and now Tim Geithner's $700 billion bailout package, Fed Chairman Ben Bernanke and almost $2 trillion have slipped under the radar.DR. ALAN MORRISON, PROFESSOR OF LAW, AMERICAN UNIVERSITY: The difficulty is that Congress has spent all its time both crafting the TARP statute for the Treasury and trying to set up some oversight mechanisms. There are no specifically directed oversight mechanisms for what the Fed is doing.VOICEOVER: The Fed has stated that its loans are short-term and risk-free, but some are worried that the Fed is losing credibility. According to Bloomberg, the Fed has taken on greater credit risks since the rescue of Bear Sterns. Other borrowers have included AIG and Citigroup. And, unlike the Treasury, the Fed has no lending cap. MORRISON: There is no limit on the amount that the Fed can spend, and they have spent about $1.3 trillion, which is more than twice the amount the Treasury is allowed to spend and about four times what Treasury is actually spending already.VOICEOVER: Three separate oversight panels have been set up to monitor the Treasury's TARP program. But the only body with any authority over the Fed's cash flow is Congress.MORRISON: Additionally, Congress has taken a hands-off view of the Fed. It's supposed to be independent. But when in effect the Fed is doing, functionally, the same thing that the Treasury's doing with TARP, all of those rationales for Congress staying out of the business of looking at the Fed do not apply.~~~INTERVIEWER: And do you think that Congress is ready to take on the Fed? I mean, there is this question of whether the Fed should be completely independent of Congress. But in a situation like this, it's looking a lot like TARP, just bigger.GRAYSON: Bigger, and completely out of control. You know, there's an old saying: "Two heads are better than one." When you've got one person, Mr. Bernanke, making decisions on how to spend $4,000 for every American, sometimes things might go wrong, particularly when it's done in secret.~~~GRAYSON: If you put out $50 billion to Credit Suisse, the taxpayers need to know that.KOHN: I'd be very concerned, Congressman, that if we published the individual names of who's borrowing from us, no one would borrow from us. The purpose of our borrowing is not to support individual institutions but to support the credit markets.GRAYSON: Has that ever happened? Have people ever said, "We will not take your $100 billion because people will find out about it"?KOHN: —we said we will not publish the names of the borrowers, so we have no test of that.GRAYSON: Well, what gave you the authority to say that? Isn't that something that we should be deciding, not you?~~~GRAYSON: I think it was Ronald Reagan who said, "Trust, but verify." It might well be that Mr. Bernanke has a large amount of credibility at this point. I'm not really sure. It might be that people are willing to trust him. But they still need to verify what's being done with such staggering, enormous, unprecedented amounts of money.VOICEOVER: Grayson may have turned some heads. The Financial Services Committee is currently scheduled to hold a hearing on this staggering, enormous, unprecedented sum of money on February 10.~~~GRAYSON: What do you think might happen if people knew how their $1.2 trillion had been spent? Do you think they might be angry?KOHN: No. I don't know, obviously.~~~GRAYSON: Well, you know, one possibility in life about why people want to do things in secret is because they're doing something wrong. And we don't know whether that's what's going on here or not, but there's only one way to find out, which is to try to shed some light on the situation. We can't simply take somebody's word for it when we're talking about $1.2 trillion. That's not good enough. We are a government of laws, not a government of men, and maybe Mr. Bernanke needs to remember that.DISCLAIMER:Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy. |
|
