By David M. Kinchen
Rep. Ron Paul, R-TX, is widely known for his opposition to the Federal Reserve Board. He’s even written a book about it, “End the Fed.” (for my Sept. 16, 2009 review of this important book, click: http://archives.huntingtonnews.net/columns/090916-kinchen-columnsbookreview.html).
So why doesn’t Matthew Cardinale in his significant — as in should be read by all concerned about the state of the nation’s financial health — mention the Texas congressman and GOP presidential candidate in an artlcle praising Vermont Sen. Bernie Sanders under the headline “First Federal Reserve Audit Reveals Trillions in Secret Bailouts”? (Link: http://www.globalresearch.ca/index.php?context=va&aid=26276).
I found the Cardinale article on the “progressive” news site Reader Supported News (link: http://readersupportednews.org/). I subscribe to many news sites, progressive, liberal, conservative and libertarian. RSN isn’t a fan of Ron Paul — far from it — and even warns its readers about the dangers of supporting “Dr. No” — as he’s sometimes called (he’s a physician) — for his opposition to many things that liberals and “progressives” would normally support, like not getting involved in the civil wars and squabbles of other countries as the world’s broke policeman.
Cardinale writes that “The U.S. Government Accountability Office (GAO) audit itself was the result of at least two years of grassroots lobbying. IPS reported in June 2009 a wide bi-partisan coalition of Members of Congress had co-sponsored legislation to audit the Federal Reserve.”
No mention of Ron Paul, who sponsored legislation for regular audits of the Fed, not just the one-time audit called for in an amendment by Sanders “as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act – a major banking overhaul passed by President Barack Obama and the U.S. Congress in 2010.” Link to Ron Paul’s blog on his 30-year effort to conduct regular audits of the Fed (http://www.ronpaul.com/congress/legislation/audit-the-federal-reserve-fed-hr-459-s202/). (Link to the text of Dodd-Frank http://www.gpo.gov/fdsys/pkg/PLAW-111publ203/pdf/PLAW-111publ203.pdf and html version of the law’s executive summary http://banking.senate.gov/public/_files/070110_Dodd_Frank_Wall_Street_Reform_comprehensive_summary_Final.pdf.)
Sanders is a lawmaker I admire, even though he isn’t always in agreement with Ron Paul. He’s on target when he’s quoted by Cardinale, who starts off his piece by saying that the first-ever audit of the U.S. Federal Reserve (in almost 100 years, since the Fed came into existence in 1913!) “…has revealed 16 trillion dollars in secret bank bailouts and has raised more questions about the quasi-private agency’s opaque operations. ‘This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else,’… Sanders said in a statement.”
Noting that the majority of loans were issued by the Federal Reserve Bank of New York (FRBNY) — the Big Dog in the Fed System — Cardinale states that “From late 2007 through mid-2010, Reserve Banks provided more than a trillion dollars… in emergency loans to the financial sector to address strains in credit markets and to avert failures of individual institutions believed to be a threat to the stability of the financial system,” the audit report states.
Cardinale’s excellent piece (excellent, that is, except for any mention of Fed critic Ron Paul) notes that the Fed doesn’t past the “smell test”: “The GAO also found existing Federal Reserve policies do not prevent significant conflicts of interest. For example, “the FRBNY’s existing restrictions on its employees’ financial interests did not specifically prohibit investments in certain non-bank institutions that received emergency assistance,” the report stated.
Read the following from Cardinale’s piece and try to remain calm after you finish it:
“From late 2007 through mid-2010, Reserve Banks provided more than a trillion dollars… in emergency loans to the financial sector to address strains in credit markets and to avert failures of individual institutions believed to be a threat to the stability of the financial system,” the audit report states.
“The scale and nature of this assistance amounted to an unprecedented expansion of the Federal Reserve System’s traditional role as lender-of-last-resort to depository institutions,” according to the report.
The report notes that all the short-term, emergency loans were repaid, or are expected to be repaid.
The emergency loans included eight broad-based programmes, and also provided assistance for certain individual financial institutions. The Fed provided loans to JP Morgan Chase bank to acquire Bear Stears, a failed investment firm; provided loans to keep American International Group (AIG), a multinational insurance corporation, afloat; extended lending commitments to Bank of America and Citigroup; and purchased risky mortgage-backed securities to get them off private banks’ books.
Overall, the greatest borrowing was done by a small number of institutions. Over the three years, Citigroup borrowed a total of 2.5 trillion dollars, Morgan Stanley borrowed two trillion; Merrill Lynch, which was acquired by Bank of America, borrowed 1.9 trillion; and Bank of America borrowed 1.3 trillion.
Banks based in counties other than the U.S. also received money from the Fed, including Barclays of the United Kingdom, the Royal Bank of Scotland Group (UK), Deutsche Bank (Germany), UBS (Switzerland), Credit Suisse Group (Switzerland), Bank of Scotland (UK), BNP Paribas (France), Dexia (Belgium), Dresdner Bank (Germany), and Societe General (France).
“No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the President,” Sanders wrote.
Right on, Bernie! Maybe we can draft Ron Paul for President and have Bernie Sanders as vice president. An Odd Couple indeed, but one right for the U.S.
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I pride myself on following business news, but I didn’t know the Fed had lent money to The Royal Bank of Scotland, which can afford Sean Connery as a spokesman and to France’s gigantic BNP Paribas, which can afford to be a major sponsor of the French Open tennis tournament. Bailing out German and Swiss banks! What fresh hell is this? as the late great Dorothy Parker said. Where is the front-page coverage of this revolting development.
Cardinale says that “The GAO is currently working on a more detailed report regarding Federal Reserve conflicts of interest, which is due on Oct. 18, 2011.” Talk about “Fright Night” just before Halloween! You ain’t seen nothin’ yet.