Tuesday, November 29, 2011

Grayson — Fed played Russian roulette

Former U.S. congressman Alan Grayson (D-FL) appeared on Countdown Monday evening to discuss how an audit of the Federal Reserve revealed the private bank giving $26 trillion to U.S and foreign banks without Congress’ authorization.
“For the first time in history, I’m talking the 100 year history of the Federal Reserve, they played favorites,” Grayson told host Keith Olbermann. “They said we’ll give a hundred billion to this institution, another hundred billion to this institution, and so on down the line, when you and I couldn’t even come close to accessing that kind of money of those terms.”
Grayson mentioned the leniency the Fed had with giving money to the banks.
“They lend out this money at 0.01 percent interest,” he said. “Go try to get a loan like that from your bank. It was corporate welfare, pure and simple, and what they were doing is they were playing around with the value of the money in your pocket, and the money in my pocket.”
“They were taking the U.S dollars and playing Russian Roulette with it, giving it out in enormous staggering sums in the hope that they might get it back. They did get most of it back, but what about next time.”
 Read the rest at Raw Story with video
Grayson: Fed played ‘Russian roulette’ with U.S. money
by Andrew Jones

Grayson points out that these decisions were made by the Federal Reserve Bank of New York. The FRBNY is a private corporation, as are all the regional Federal Reserves banks. That means that they are under the control of the financial sector rather than of elected officials accountable to the public.


Chewitup said...

Grayson had promise, but just couldn't contain himself and became extremely unlikable. Too bad. He's a bright guy- not sure he's entirely in paradigm. Now that he's been away for a while, he could become effective again if he can just show a modicum of magnanimity.

Joe C said...

It's worth mentioning, Chewitup, that 52 D incumbents got tossed in 2010. It was a bad year to be a Dem incumbent, magnanimous or not. Plus, the Cook Partisan Voting Index has FL 8 as R +2...not a guarantee under normal circumstances (Grayson is self-evidence of that) but surely a bad start in a wave election.

Also, I don't think appearing on an Olbermann show is part of the Maganimous reformation handbook. :>)

mike norman said...
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Dan said...

What exactly is with the sudden fear (even with some in the MMT paradigm) with the Federal Reserve extending loans on an emergency basis? Currently the Fed only loans are made on a fully collateralized basis (even though the banks' assets are already supposed to be fully regulated by federal officials). Warren Mosler himself has advocated allowing the Fed to lend to member banks completely unsecured for this very reason.

Issues like conflict of interest and transparency are important and there should be steps taken towards ensuring both. But curtailing the Fed's ability to act as a lender of last seems counterproductive.

Tom Hickey said...

The problem I have with it was the lack of transparency by unelected and unaccountable technocrats. I have a similar problem with monetary policy (interest rate setting) by the Fed.

This kind of thing strikes me as both anti-democratic and anti-capitalistic — basically a command economy managed by technocrats. This is not what is being represented to Americans about how things work.

It's the old Wizard of Oz thing.

Dan said...

Tom, are you suggesting that the Fed announce which banks it lends to through its discount window with no time lag?

But on this larger point, my problem is that the criticism ussually goes far beyond transparency, attacking the very premise of central banking and regulation of the banking sector. It is a narrative that says the Fed is debasing the dollar by "printing money" and bailing out banks at the taxpayer expense. That is, it has gotten traction through fear mongering and spewing economic illiteracy.

Tom Hickey said...

Tom, are you suggesting that the Fed announce which banks it lends to through its discount window with no time lag?

Why should insiders only have knowledge of Fed ops and not the market as a whole? That's capitalism?