In his blog yesterday, The Washington establishment suffers a serious defeat, Glenzilla summarizes the significance of Thursday’s bi-partisan vote on the Paul-Grayson Bill in the House Finance Committee that calls for an audit of the Federal Reserve.
This is an effort that goes back at least 57 years when Congressman Wright Patman of the House Banking and Currency Committee complained:
In fact there has never been an independent audit of either of the 12 banks of the Federal Reserve Board that has been filed with the Congress where a Member would have an opportunity to inspect it. The General Accounting Office does not have jurisdiction over the Federal Reserve.
Upon becoming chairman of that same committee twelve years later, he tried to press for an audit, as reported in this article from the February 14, 1964 edition of Time Magazine :
Banking: Fight over the Federal Reserve
In a Washington hearing last week, the chairman of the House Banking Committee stared at one of the nation’s top managers of money. Grumbled Texas Representative Wright Patman: “You can absolutely veto everything the President does. You have the power to veto what the Congress does, and the fact is that you have done it. You are going too far.”
The object of Patman’s wrath was ascetic-looking Alfred Hayes, president of the New York Federal Reserve Bank and a ranking member of the U.S.’s powerful central banking system. For three decades, Wright Patman has fumed and fussed that the Federal Reserve System is too secretive, too independent, too insensitive to the hopes of small borrowers. A sharecropper’s son, he often charges that it is a tool of Wall Street bankers.
Immediately after moving up to the chairmanship of the Banking Committee last year, Patman started preparing what has become one of the farthest reaching investigations in the Federal Reserve’s 50-year history. Patman has a team of economists and consultants studying the system with a critical eye, intends to call twelve top non-Government economists to the stand by month’s end, and is pressing for new legislation to curb the central bank.
Patman was, of course, unsuccessful in his efforts, which makes the passage of the Paul-Grayson bill all the more historic. (And a shoutout to Jane Hamsher at FDL for organizing a supportive letter writing campaign. ) Pulling the curtain back from that most secretive and powerful of quasi-government agencies would have to count as the greatest revolutionary act to come out of the US Congress in the last century, assuming it ever becomes law.
Meanwhile, the long knives are out on Capitol Hill for Treasury Secretary Timothy Geithner, who got both barrels during his testimony Thursday at a joint congressional committee on the miserable state of the economy. It didn’t help Geithner’s case that earlier in the week TARP Inspector General Neil Barofsky released his scathing report about the botched AIG bailout that Geithner oversaw as the then head of the NY Federal Reserve Bank.
While even Paul Krugman allows that the bailout was probably necessary to prevent another Great Depression, the terms which Geithner negotiated with the likes of Goldman Sachs really sucked. Goldmanvreceived $12.9 billion from American taxpayers, or 100 cents on the dollar for its speculative insurance bets. Warren Buffet, on the other hand, made them pay dearly for his investment in their company, which in combination with the taxpayers’ contribution, saved their sorry asses from bankruptcy. A growing number of congressmen from both sides of the aisle are now calling for Geithner’s resignation, including Rep. Peter DeFazio (D-OR) who is trying to enlist the support of the Progressive Caucus.
Geithner represents a growing political threat to the Obama Administration. In addition to the AIG fiasco, he is perceived as colluding with the Fed in shoveling hundreds of billions of dollars of interest free loans to other “Too Big To Fail” financial institutions, without even requiring them to pass the money down to the regional and community banks where that money could be lent to local businesses to create things like, oh, you know–JOBS! Or provide mortgage write-downs for American homeowners bamboozled into loans they couldn’t afford, 14% of whom are either delinquent in their payments or are already in foreclosure, with no end in sight. Or provide any number of programs that could help ordinary Main Street Americans cope with the disaster that Wall Street has inflicted on them.
Instead, the Wall Street gangsta bankstas are using our money to lend it right back to us at a huge markup by buying US Treasuries, trading for their own proprietary accounts, buying up their competition, or shipping it overseas and placing all that moolah into tax-free bearing accounts. It’s like walking into a casino and having the house provide the gambler an unlimited amount of chips– heads they win, tails we lose; socialism for the rich, capitalism for the poor; privatizing the profits, socializing the losses.
Krugman, discussing the AIG bailout in his column Friday, ends with this:
So here’s the real tragedy of the botched bailout: Government officials, perhaps influenced by spending too much time with bankers, forgot that if you want to govern effectively you have retain the trust of the people. And by treating the financial industry — which got us into this mess in the first place — with kid gloves, they have squandered that trust.”
It would be the irony of all ironies if the Rethuglicans, who engineered this mess, succeed in grabbing the populist mantle from the Dems and become identified in the public mind as fiscally responsible agents of change.
If that happens, just shoot me.
Hey Michael,
Thanks for the big brotherly Urantian “welcome”!
Just the facts, Ma’am…Hotels.com is having a sale on dream dubai vacations…
Well, it’s “official”….even though no one anywhere seems to know where the money is coming from to escalate in Afghanistan against an “enemy” that isn’t even there anymore…
I need a lawyer who will file a case against the Federal Reserve Board for a conspiracy to DESTROY the infrastructure of the USA.
Who is a lawyer that wants to file such a “frivolous” law suit on my behalf…? I would not be heading down this road unless it would be “easy” to do – thanks to the town I live in that Kellogg runs….
Welcome, Nameless,
So you think the litigious road is “easy,” eh?
Good luck with that. . .
;->
Macassio at The Lake sheds light on what was, and what could have been, if Geithner had been a little less whimpy w/ AIG.
‘Who else matters?’
Short answer rhymes with ‘snow fun’…but maintaining the fictions of their grassroot supporters may prove important, being that this administration is trying very hard to distance itself from the optics of the previous ‘L’etat? – C’est moi et vas te faire enculer’ regime while retaining many of the same policies that made them so…popular.
;>)
I’m with Darkblack on this one.
Geithner never was even a very convincing dancer on this matter – and pulling him out of the guilty crowd for a few more pas de deux was not that surprising considering that first he had to be forgiven for lawbreaking judgments that would have precluded freshman-level students from even thinking about careers in the Treasury Dept for his ilk.
Suspicions abounded from the start of his time on the stage – and he will exit – stage right – soon – having accomplished their goals – with a nice parting gift (retirement package) compliments of the well-heeled taxpayers.
[Darkblack said:]
You’ve predicted an incipient media narrative! Of course, it will be irrespective of the facts, as most such things are.
Geithner and Summers played their roles well – extending this ludicrously obvious Wall Street bust-out kabuki into an incoming executive branch that needed to be tarred with the old ‘everybody does it’ brush tout de suite so as to maintain the fitful fictive dreams of a soporific electorate all full of ‘change’ and in need of some fast-acting fizzy disappointment to burp up the bubble – and now their disposability rests solely upon the Obama administration’s need to ‘be liked’. But by whom is the question, no?
The Obama administration is already very well liked by the funders who ensured their election. Who else matters?
If the poorly educated do believe that the Rethugs are their economic saviors for a few moments, it will be brief. Ending just before they begin their trek to the poor house.
And if it depends on your reporting perspicacity, [Propagandee], you will never have to shoot yourself. You’ve been way ahead of the rest.
It would be the irony of all ironies if the Rethuglicans, who engineered this mess, succeed in grabbing the populist mantle from the Dems and become identified in the public mind as fiscally responsible agents of change.
[ ] are the editor’s
The book to read about the Fed is William Greider’s Secrets of the Temple.
‘It would be the irony of all ironies if the Rethuglicans, who engineered this mess, succeed in grabbing the populist mantle from the Dems and become identified in the public mind as fiscally responsible agents of change.’
Aha! You’ve predicted an incipient media narrative! Of course, it will be irrespective of the facts, as most such things are.
Geithner and Summers played their roles well – extending this ludicrously obvious Wall Street bust-out kabuki into an incoming executive branch that needed to be tarred with the old ‘everybody does it’ brush tout de suite so as to maintain the fitful fictive dreams of a soporific electorate all full of ‘change’ and in need of some fast-acting fizzy disappointment to burp up the bubble – and now their disposability rests solely upon the Obama administration’s need to ‘be liked’. But by whom is the question, no?
Regardless, I’m of the opinion that this bill will send some cockroaches scurrying to the corners if passed…Whether the public has the stones to put on the pointy toes and force their representatives to finish the job is another matter.
;>)
Sorry, dude; I can’t afford the gun or the ammo.