Fed: We Will Review, and Provide Exceptions for, Ourselves

by: Chris Bowers

Tue Feb 10, 2009 at 20:30


Anger over the lack of transparency in the Federal Reserve's plan to purchase, subsidize, and otherwise guarantee between $1.8 trillion and $12 trillion(!) in toxic assets is rising. Today, Senators as ideologically divergent as Bernie Sanders and John Ensign complained about this in a hearing with Treasury Secretary Geithner.

More in the extended entry.

Chris Bowers :: Fed: We Will Review, and Provide Exceptions for, Ourselves
From a Senate Banking committee hearing today:

Meanwhile, senators as right-leaning as John Ensign (R-NV) and as left-leaning as Bernie Sanders (I-VT) have pushed the Fed today to be more transparent in disclosing which entities are receiving TALF loans. "I think it's a good idea to ... say to the Federal Reserve, 'Let's see what you are actually doing in the marketplace,'" Ensign told reporters today, "because the American people who are the ones who are on the hook."

In the House, the Financial Services committee used this broad, bi-partisan anger to extract a slightly increased promise of transparency from the Fed:

Federal Reserve Chairman Ben S. Bernanke initiated a review of the information it provides the public after lawmakers criticized the central bank's disclosure policies during the unprecedented expansion of its holdings.

"We at the Fed have begun a thorough review of our disclosure policies and the effectiveness of our communication," Bernanke said today in remarks prepared for testimony before the House Financial Services Committee. Board Vice Chairman Donald Kohn will lead a panel for the review(...)

The Kohn panel will have a "presumption" that the public has a right to know and that "nondisclosure of information must be affirmatively justified by clearly articulated criteria for confidentiality," Bernanke said.

Bernanke also said the Fed is preparing a Web site where the public can find more details and analysis about the Fed lending effort.

This is "something," but it is still not nearly enough. The review in internal, conducted by a Federal Reserve board member. Further, there is an escape clause. So really, this new transparency isn't much of anything at all.

No. Here is a better example of the sort of transparency we need:

Send in the examiners.  Yeah, I know, you're talking about "stress tests".  Uh huh.  Let's have those examinations now and forevermore in the future be public information.  If a bank wants to operate under our laws and have the privilege of fractional reserve banking, they can open their books and examinations at all times to the public.  Period.

This year, the Federal Reserve will surpass the United States Federal Government as the largest institution in the world, at least in terms of monetary expenditures. If, in order to please moderates, we have to sacrifice school construction and flu prevention while banks get another $1.5 trillion, we have the f**king right to know where, and how, that money is being spend.


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The Kohn panel will have a "presumption" that the public has a right to know and that "nondisclosure of information must be affirmatively justified by clearly articulated criteria for confidentiality," Bernanke said.

right, right...

thought #2 GO BERNIE

thought #3 remember the the 1st bailout?

http://www.marketwatch.com/vid...


won't disclosure occur only after the fact? (4.00 / 1)
after they've already done stuff?

and -- can Congress stop them if they're not going to them to get the money? (12 trillion ?!?)


Amen Chris (4.00 / 2)
To be crystal clear, NOTHING that gets done on the stimulus (and here's hoping it gets fixed in conference) will work until and unless the Fed gets reigned in, true transparency comes to the process, Obama gets out of bed with the drowning big bank portion of the financial sector, and the folks that brought us to this brink are indicted, tried, and jailed.

For the stimulus to have ANY chance of working, the banking fiasco must be addressed. Now. And NOT by propping up the carcasses of BofA et al.

We do indeed have a fucking right to know. And Bernake better fucking answer some fucking questions. Or, he should go to jail.


FT -- "three arbitrary, self-imposed constraints: no nationalisation; no losses for bondholders; and no more money from Congress." (4.00 / 2)

http://www.ft.com/cms/s/0/9ebe...

... It has not asked what needs to be done to be sure of a solution. It has asked itself, instead, what is the best it can do given three arbitrary, self-imposed constraints: no nationalisation; no losses for bondholders; and no more money from Congress. Yet why does a new administration, confronting a huge crisis, not try to change the terms of debate? This timidity is depressing. ...


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