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Date: 2024-08-16 Page is: DBtxt001.php txt00001370 |
Society and Economy |
COMMENTARY Senator Sanders deserves a huge thank-you for helping to get this report prepared, and the other government authorities should be ashamed that something like this was not done a long time ago. Over and over again the GAO does important work, but way too late for it to have much value. This important report published in July 2011 refers to major events that took place more than two years before, mainly in the last quarter of 2008. There is a time and place for secrecy, but the default position should be total transparency, and it should only be rare for actions of the government to be kept secret. The scale of the financial disaster that emerged in 2007 and 2008 is exposed to some extent in the GAO report, and it does, of course raise questions about what might be next as the European Sovereign Debt bubble deflates. My view of modern economics is that it has become a completely virtual construct with no inherent substance. It is a huge model that has some correlation with a real world, but has no connection with this world. It is ... shall we say, at best, a system that has the controllers all pushing on strings, and as any child knows, that does not work. Because of the power of money to corrupt, all sorts of bad decisions have been made over the past thirty or forty years ... and continue to be made. But there is some good news ... the science and technology available is very powerful and could be used to make huge improvements in the performance of society and the economy to maintain and improve quality of life.
The role of TrueValueMetrics (TVM) is to provide a system of metrics that replaces the domination of money profit, GDP growth and stock market prices in economic decision making, and incorporates a value dimension in the metrics. Clearly the monetary economists have 'lost it' and big changes will happen as more and more people appreciate the scale of the failure. Hopefully, a change can be made in a way that does not result in massive value destruction before getting back to positive global valueadd.
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GAO Finds Serious Conflicts at the Fed The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. 'As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,' said Sanders. 'This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else.' Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. '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 said. The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans. For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs. In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest. To Sanders, the conclusion is simple. 'No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed,' he said. The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans. The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG. A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. 'The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street.'
Read the GAO report here:
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From Senator Sanders' website
October 19, 2011 |
The text being discussed is available at http://sanders.senate.gov/newsroom/news/?id=bfa0cbec-cce1-4520-8899-122c8b719105 |
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