William Greider: Outing the Fed

[marmar]

from The Nation:



Outing the Fed

William Greider
May 10, 2010


The weirdness of this political system is reflected in the fact that it takes a Socialist senator from Vermont, Bernie Sanders, and a libertarian Republican from Texas, Rep. Ron Paul, to beat the banking lobby. The Democrats are making a show of "Wall Street reform" but choking on the tough issues. Republicans are in the tank, as expected, though nervous about the public fury.

Sanders and Paul, however, found an opening with their bill to force a GAO audit of the sacrosanct Federal Reserve. This is a big deal, much bigger than most imagine. Congress has sputtered for years about the Fed’s imperious secrecy but never found the nerve to do anything. The Sanders-Paul audit bill, if it passes, will only be a first breach in the wall, but it promises to keep alive popular demands for more fundamental reforms.

Rep. Alan Grayson, the first-term Floiida Democrat who partnered with Paul to pass the House version, has a distinctive way of explaining things with brutal clarity. "Fed Chairman Ben Bernanke doesn’t want an audit because Ben Bernanke doesn’t want to be audited," Grayson said. "Treasury Secretary Tim Geithner, the former head of the New York Fed, doesn’t want an audit because Tim Geithner doesn’t want to be audited."

Forget all the official blabber about "Fed independence." The central bank has never been independent from the most powerful bankers it is supposed to regulate. The everyday relationship is incestuous. What the Fed and its main constituency of Wall Street power houses really fear is that people will get a better look at their corrupt private dealings. During the financial crisis, the central bank handed out something like $2 trillion in emergency loans and other goodies. All efforts by Grayson and others to find out who exactly got this money were rebuffed by the Fed governors. Bloomberg sued for disclosure and won in Federal court. The Fed is appealing the ruling. ...........(more)

The complete piece is at: http://www.thenation.com/article/outing-fed

[Octafish]

1. Secret Banking is same as Secret Government

Both are un-democratic.

Thanks for a great article and a most important post, marmar.

[Phoebe Loosinhouse]

2. Greider and the Nation - consistently excellent.

I used to subscribe, but their format is almost too dreary to read even though you know it will be the best, most informative, most researched, most insightful, most knowledge-based and non-inflammorty by design article you could possibly read.

Why does their paper look like recycled groats? I think they would get more readership if they went the Matt Taibbi route and just published their stories in Rolling Stone.

[zipplewrath]

3. A touch of hyperbole

But the overall conclusion is correct. Timmy and Ben don't want to be audited, because we'll find out what they've done. The Fed is regularly audited. However, there are certain areas that are not. I am sympathetic to their desire to avoid immediate release of their open market commmittee information, as we don't want people figuring out how to "game" the system and deliver reports or other information that would be timed and worded to manipulate the system. But the flip side is that the fed and the treasury have been playing it fast and loose the last couple of years and we need to find out where the money went, and why.

It can be done with a certain amount of secrecy. The DoD has classified audits all the time. But it's time for the GAO to get in there and see what's going on. Truth is, the CBO probably ought to be in charge.

But I have no doubt that the conservative democrats, the GOP and Obama will ensure it doesn't really happen, although they may try to create some appearance that it has.

[glitch]

4. This is a time that demands hyperbole.

And if that doesn't work we may have to look into hysterics.

[ljm2002]

6. "The DoD has classified audits all the time"...

...and this supports secret audits, how???

The DoD is a black hole that sucks in money by the trillions, never to be seen again. Every now and then a few billion go missing, and they're like, "oops".

The fact that the DoD uses classified audits is a very strong argument against the practice.

[The Doctor.]

5. This MUST happen.

The first step in dismantling secret governance.