Wednesday, December 1, 2010

Converting B-Daddy on the Fed

W.C. Varones and Jr. Deputy Accountant have been a harsh critic of the Federal Reserve. I have not been on this bandwagon, seeing the reserve as a necessary evil, kind of like government itself. However, the need for transparency and oversight at the fed is revealed by a little transparency. The Fed has spread around money to foreign banks and U.S. companies that are not even banks in a disgusting display reminiscent of sailors on shore leave, except sailors don't print their own cash.

From the article:

When Lehman Brothers failed Sept. 15, 2008, borrowers started to line up for the PDCF. That day, the single-biggest loan went to Barclays Capital, the investment bank of U.K. lender Barclays PLC that eventually bought a big piece of Lehman out of bankruptcy. Several foreign banks benefited from the program, including Deutsche Bank, BNP Paribas and UBS.

Apparently, we have Bernie Sanders to thank for leading this fight.

Thanks to Mr. Sanders, who has been leading the fight to make the Fed more transparent, the Government Accountability Office will conduct an audit of the Fed's emergency actions going back to the start of the crisis in 2007.
The fed claims that it was responsible for averting economic disaster and that it made money on the operations.

The Fed and major Wall Street players defended the crisis lending actions in remarks Wednesday. Dallas Fed President Richard Fisher said the central bank "stepped into the breach" in its role as a lender of last resort.

"We took an enormous amount of risk with the people's money," Mr. Fisher said, speaking at a community forum in Killeen, Texas. But the crisis lending programs are now all closed, he said, "and we didn't lose a dime, and in fact we made money on every one of them."

I await the audit findings before I hit the "believe" button.


  1. Welcome to the party, B-Daddy!

    The fed claims that it was responsible for averting economic disaster and that it made money on the operations.

    This claim may be narrowly true, but misses the main point that the Fed caused the financial crisis in the first place through Alan Greenspan's bubble-blowing and complete failure of the Fed's regulatory oversight responsibilities.

    It's like the fireman coming and burning down half the neighborhood and then wanting credit for saving the rest.