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Thread: Inspector General Federal Reserve is Clueless

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    Senior Member Franco's Avatar
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    Default Inspector General Federal Reserve is Clueless

    Anyone that was against all the finacial bailouts has good reason to be angry. The Federal Reserve is asleep at the wheel!

    Is this the change many of you voted for? They don't know were billions of our taxpayer money is.

    Just another great reason why we need less government and not BIG government.

    http://dailybail.com/home/there-are-no-words-to-describe-the-following-part-ii.html
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    “The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of lending institutions and moneyed incorporations.” –Thomas Jefferson

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    Senior Member Bayou Magic's Avatar
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    A trillion here, a trillion there...what's the big deal?

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    Senior Member YardleyLabs's Avatar
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    Quote Originally Posted by Franco View Post
    Anyone that was against all the finacial bailouts has good reason to be angry. The Federal Reserve is asleep at the wheel!

    Is this the change many of you voted for? They don't know were billions of our taxpayer money is.

    Just another great reason why we need less government and not BIG government.

    http://dailybail.com/home/there-are-no-words-to-describe-the-following-part-ii.html
    .
    Grayson is, of course, a typical wise-a$$ liberal Democrat who migrated from New York to Florida after graduating from Harvard. The specific actions he was "investigating" occurred under Bush. However, it sounds to me like in this questioning Grayson was either knowingly grandstanding by asking questions that could not reasonably be answered, or he was demonstrating a lack of understanding of the monetary system consistent with a Freshman Congressman newly appointed to the committee and holding his first "seance." I suspect the former based on comments he made about Limbaugh at about the same time:

    "In early 2009, Grayson responded to controversial comments by talk radio personality Rush Limbaugh, in which Limbaugh stated that he wanted President Barack Obama "to fail", by saying, "Rush Limbaugh is a has-been hypocrite loser, who craves attention. His right-wing lunacy sounds like Mikhail Gorbachev, extolling the virtues of communism. Limbaugh actually was more lucid when he was a drug addict. If America ever did 1% of what he wanted us to do, then we'd all need pain killers."[10] On March 3 of that year, satirizing incidents in which prominent Republican officials (including Republican National Committee Chairman Michael S. Steele) were forced to apologize to Limbaugh for criticizing him, Grayson released a second statement, in which he said, "I’m sorry Limbaugh called for harsh sentences for drug addicts while he was a drug addict. I'm also sorry that he’s bent on seeing America fail. And I’m sorry that Limbaugh is one sorry excuse for a human being." (from Wikipedia)

    The money system in America works by virtue of intraday loans between financial istitutions that are part of the Fed. Every transactions through the banking system actually generates multiple paper (electronic) transactions in the form of debits and credits as funds move from regional bank to Federal reserve banks, between Federal reserve banks, and finally back to the receiving bank. To allow availability of funds pending actual transfer of reserves, there are numerous cash advances made prior to settlement (typically done the following business day). The velocity of these transactions is innately untrackable in real time. In that sense, no one can identify where "loans" are being given at any point in time. As the risks of bank failures mounted last year, the actual process of transferring funds began to fail because banks were not prepared to assume the risk of a bank failure during the day that could place them in the position of having to recover advanced intraday credit to the bank that failed. To allow the system to continue, the Fed began guaranteeing these intraday loans. As I understand Grayson's questions he was basically asking for an audit of what loans were guaranteed. While it would be possible to audit the process and the screening procedures for allowing a bank to participate in Fed transactions, the actual numbers at any point in time cannot be pinned down with any degree of precision. In addition, audits of the details of intraday bank guarantees would need to be audted at the individual Federal Reserve Bank level. These banks are legally independent of the Federal Reserve Board of Governors and are not within the scope of responsibilities of the central board's IG.

    The Federal Reserve is a quasi public corporation that is directed by Board of Governors that serve for specific terms. There are currenly five governors for the Federal Reserve: four originally appointed by Bush and one by Obama. Obama also reappointed Bernanke as Chairman.

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    Senior Member kjrice's Avatar
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    Last edited by kjrice; 07-08-2009 at 01:08 PM.
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    Senior Member Gerry Clinchy's Avatar
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    Jeff, shouldn't the Fed lady have been able to give the same coherent answer that you gave?
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    Senior Member YardleyLabs's Avatar
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    Quote Originally Posted by Gerry Clinchy View Post
    Jeff, shouldn't the Fed lady have been able to give the same coherent answer that you gave?
    Federal bureaucrats learn early that you only lose by being argumentative with a member of congress -- especially when they are grandstanding.

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    Senior Member Gerry Clinchy's Avatar
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    Sorry, Jeff, not a good enough reason.

    It is Congress's job to ask such questions, and the answer is to the taxpayers. There are a lot of jerks in Congress, but even a jerk can occasionally ask a question that deserves an answer. It does not help the cause of "transparency" to blow off a Congressional inquiry.
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    Member txbadger's Avatar
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    Jeff, I understood his questions a bit differently. He appeared to question where had the money, which the Fed had apportioned, had gone. With around 500 failed banks, so far, it would seem a reasonable line of questioning and your bringing Rush into the conversation a typical liberal attempt to misdirect attention of the mater at hand. Similar to ol Bill's perjury, it was just about sex never mind the law.

    It would seem your intellect would be better served addressing why BO has now expanded government with over 30 Czars who only answer to him.

    Meanwhile while we bicker over tidbits while Our government expands far beyond the powers granted to it.

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    Senior Member dnf777's Avatar
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    Quote Originally Posted by txbadger View Post
    Jeff, I understood his questions a bit differently. He appeared to question where had the money, which the Fed had apportioned, had gone. With around 500 failed banks, so far, it would seem a reasonable line of questioning and your bringing Rush into the conversation a typical liberal attempt to misdirect attention of the mater at hand. Similar to ol Bill's perjury, it was just about sex never mind the law.

    It would seem your intellect would be better served addressing why BO has now expanded government with over 30 Czars who only answer to him.

    Meanwhile while we bicker over tidbits while Our government expands far beyond the powers granted to it.
    My take on this is that W drove our Titanic into the ice berg and we started taking on water at a catastrophic rate....now BO is spending money on upgrading the accessories, rather than good, solid patches.
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    Senior Member YardleyLabs's Avatar
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    Quote Originally Posted by txbadger View Post
    Jeff, I understood his questions a bit differently. He appeared to question where had the money, which the Fed had apportioned, had gone. With around 500 failed banks, so far, it would seem a reasonable line of questioning and your bringing Rush into the conversation a typical liberal attempt to misdirect attention of the mater at hand. Similar to ol Bill's perjury, it was just about sex never mind the law.

    It would seem your intellect would be better served addressing why BO has now expanded government with over 30 Czars who only answer to him.

    Meanwhile while we bicker over tidbits while Our government expands far beyond the powers granted to it.
    There were $750 million TARP funds administered by the Treasury Department (under Paulsen) that were used to finance grants and guarantees for specific financial institutions. It is perfectly legitimate to ask where those funds went since the disbursement of those funds last fall still seems to lack much documentation.

    There is also the trillion or so in Fed loan guarantees which were made at the discretion of the Fed (no congressional or presidential approval was needed) which were used to guarantee interbank loans to support funds flow. Historically, these transactions were not guaranteed by anyone and the individual banks were solely at risk. When bank failures made the risks unacceptable, the Fed began guaranteeing them. These were not grants to individual banks, but to a process for funds flow. As a result of these guarantees, interbank loans needed to support routine currency transactions began to flow again. I understood his question to be a request for investigations of "who benefited" from these loans.

    There were two problems in responding that I felt the IG attempted to provide. First, these loans represent a balance sheet exposure, not an expense in the absence of a bank failure that triggers the guarantee. Therefore, there is no identifiable beneficiary. Second, the transaction flow in managed through the individual Federal Reserve Banks which are independent legal entities. The scope of responsibilities for the the IG being questioned only extends to the activities of the Board of Governors which does not administer the Federal Reserve Banks. This point was actually made both in her presentation and in a subsequent letter to the Committee. As a separate issue, it is worth noting that the activities being questioned occurred under the Bush administration and under the aegis of a largely independent banking strucutre not directed by the President anyway. (The structure if the Federal Reserve system actually results in part from fears dating back to founding of our country concerning the creation of a Government operated central bank.)

    What does any of this have to do with the various czars? FWIW, Obama has clearly used this approach more than prior Presidents, but it has been routine for a long time (e.g.drug czars, energy czars, war czars, czars for funneling funds to faith based organizations, etc.).

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