Ron Paul regarding the Senate Audit the Fed bill:
Bernie Sanders has sold out and sided with Chris Dodd to gut Audit the Fed in the Senate. His “compromise” is what the Adminstration and banking interests want: they’ll allow the TARP and TALF to be audited, but no transparency of the FOMC, discount window operations or agreement with foreign central banks. We need to take aciton and stop this!
I am outraged. The Senate just voted down the Vitter Amendment and against a real audit of the Federal Reserve. My entire team and I are going to work very hard to make sure the American people know who voted right, and who voted with the banking special interests.
ORIGINALLY POSTED May 11, 2010 13:50
The Senate has passed what is being called the Audit the Fed bill with overwhelming support (96-0).
Up until about last Thursday (coincidence?) there was a possibility through the Vitter amendment (see below) that the Audit the Fed bill in the Senate was going to actually audit Fed monetary policy and discount window transactions as per the House of Representative’s bill (HR1207) which passed with significant support last year. The new bill, which was passed in the Senate, was changed by Senator Sanders at the very last minute, according to Ron Paul. Additionally, any hope of the Vitter amendment being passed seems to have been wiped out by Thursday’s stock market crash, which we have suggested was an attack on our financial system and a clear message to Congress by parties interested in keeping Fed activities secret.
Even the world’s most savvy stock-market giants (e.g., Warren E. Buffett) have warned over the past decade that derivatives are the fiscal equivalent of a weapon of mass destruction (WMD) – potentially lethal. And the consequences of such an explosion would make the recent global financial and economic crisis seem like penny ante. But generously lubricated lobbyists for the unrestricted, unsupervised derivatives markets tell congressional committees and government regulators to butt out.
While banks all over the world were imploding and some $50 trillion vanished in global stock markets, the derivatives market grew by an estimated 65 percent, according the Bank for International Settlements. BIS convenes the world’s 57 most powerful central bankers in Basel, Switzerland, for periodic secret meetings. Occasionally, they issue a cry of alarm. This time, derivatives had soared from $414.8 trillion at the end of 2006 to $683.7 trillion in mid-2008 – 18 months’ time.
The derivatives market is now estimated at $700 trillion (notional, or face, value, not market value). The world’s gross domestic product in 2009: $69.8 trillion; America’s, $14.2 trillion. The total market cap of all major global stock markets? A mere $30 trillion. And the total amount of dollar bills in circulation, most of them abroad: $830 billion (not trillion).
One of the Middle East’s most powerful bankers conceded recently that even after listening to experts explain the drill, he still does not understand derivatives and therefore doesn’t trust them and won’t have anything to do with them. And when that weapon of mass destruction explodes, he explained, “Our bank’s customers, from all over the world, will be saved from the disaster.”
What’s so difficult to understand about derivatives? Essentially, they are bets for or against the house – red or black at the roulette wheel. Or betting for or against the weather in situations in which the weather is critical (e.g., vineyards). Forwards, futures, options and swaps form the panoply of derivatives. Credit derivatives are based on loans, bonds or other forms of credit. Over-the-counter (OTC) derivatives are contracts that are traded and privately negotiated directly between two parties, outside of a regular exchange.
Even a cynic can find Washington’s hypocrisy shocking at times. The Wall Street Journal reports today a House bill that would force lawmakers to make greater disclosures on financial transactions and disallow them from trading on nonpublic information is going nowhere fast.
That’s right. Members of Congress are currently allowed to profit on insider trading!
The bill, which has been languishing in the House for four years, would require elected officials “to make their financial transactions public within 90 days of a purchase or sale” and “prohibit lawmakers from trading in financial markets based on nonpublic information they learn on the job,” the WSJ reports.
It seems they’re above the transparency they’ve been calling for on Wall Street.
This comes a day after the same newspaper reported several lawmakers profited by betting against the housing and stock market in 2008. And some did it using derivatives they’ve recently been railing against.
As our colleague Henry Blodget wrote Tuesday, “If you’re going to complain about how awful short-selling is and how evil and venal people are for doing it, you should probably abstain from the practice yourself.”
ATLANTA, Georgia, Apr 30, 2010 (IPS) – At least eight U.S. states are considering proposals to start state-run banks in the wake of an economic crisis where many private banks ceased or greatly decreased their lending, literally shrinking the money pool available in state economies.
Economist Ellen Brown, author of “Web of Debt”, has been writing commentaries on various websites and runs a Google Group that has been pushing the idea of state-run banks for a couple of years, efforts which she says have made a lot of state legislators aware that a state-run bank was even a possibility.
North Dakota is the only one out of the 50 U.S. states that is still operating with a fiscal surplus, and some economists argue it is in part due to the state-owned Bank of North Dakota – the only bank of its kind in the U.S. – which has been able to pump money into its own economy by making loans to farmers, small businesses and families.
Numerous states are beginning to consider the idea of starting their own bank, since the issuance of credit is one of the main ways that money enters the economy.
The George W. Bush and Barack Obama administrations have pumped trillions of dollars into private banks through the federal bank bail-outs, with the hope that they will begin lending again. Yet any entity can start a bank, including a corporation, university, nonprofit, or even a governmental entity like a state, city, or county.
Hawaii, Illinois, Massachusetts, Michigan, Missouri, New Mexico, Vermont, Virginia, and Washington each have proposals on the table in their respective state legislatures considering the formation of a state-run bank in one way or another.
In addition, current candidates for political office in eight states – California, Florida, Idaho, Illinois, Missouri, Oregon, Vermont, and Washington State – are pushing a state-run bank as part of their platform.
“I researched this for several months,” State Sen. Hanson Clark of Detroit, Michigan, told IPS. “I spoke to the president of the Bank of North Dakota in early February. It’s a way to get our economy going in the region and the state, to create more jobs. Time and time again business people would tell me they were ready to expand, do projects, but they didn’t have financing.”