Thursday, November 13, 2008

Bloomberg: Boehner Demands Fed Identify Recipients of Loans

It was only a matter of time before this happened. You can blame that terrible Bloomberg column of a couple of days ago. More of the same misinformed reporting today:

House Republican leader John Boehner called for the Federal Reserve to disclose the recipients of almost $2 trillion of emergency loans from American taxpayers and the troubled assets the central bank is accepting as collateral.

Boehner, in a prepared statement, also asked the Federal Reserve to comply with a Freedom of Information Act request seeking details about the loans.

The Fed ``should comply with this Freedom of Information Act request, and in the interest of full and fair disclosure, they must begin providing lawmakers and taxpayers all information about how they are using federal tax dollars,'' Boehner said.

My email to the Bloomberg journalist (Laura Litvan) who wrote this tripe.

These were not "emergency loans from American taxpayers." The Fed has infinite ability to create money in our system and does so by simply crediting bank reserve accounts.

If indeed the $2 trillion in credits were loans from American taxpayers then it would stand to reason that personal savings of Americans would decline by that amount. Yet this has not happened.

Furthermore, banks are regulated by the Fed, FDIC and Office of the Controller of the Currency as to what assets they are allowed to own. They are constantly monitored and scrutinized and must conform to minimum capital requirements. The need to post collateral is redundant under this institutional structure.

The assets that banks own are all government approved and marginable at the Fed's Discount Window. This list is available to the public, free of charge, at

Your article is steeped in misinformation and displays a horrible lack of understanding of monetary operations and how the Fed functions. It is misleading and ignorant.

-Mike Norman

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