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First Audit Results In The Federal Reserve's Nearly 100 Year History


By Patrick   Follow   Thu, 29 Nov 2012, 1:29am PST   2,396 views   41 comments   Watch (0)   Share   Quote   Permalink   Like (1)   Dislike  

http://beforeitsnews.com/economy/2012/09/first-audit-in-the-federal-reserves-nearly-100-year-history-were-posted-today-the-results-are-startling-2449770.html

The first ever GAO (Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out.

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pazuzu   befriend   ignore   Thu, 29 Nov 2012, 1:48am PST   Share   Quote   Like (1)   Dislike     Comment 2

Patrick c'mon we cannot trust the harvesting of the sheeps labor to common folk. This is best left to top notch sociopaths, and sociopaths prefer to work in secret.

Mr Happygoluckofus   befriend   ignore   Thu, 29 Nov 2012, 3:22am PST   Share   Quote   Like (1)   Dislike (1)     Comment 3

The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.

That's a goddamn lie Iwog told me it was all paid back.

Ben Bernanke (pictured to the LEFT), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets.

Though I can understand why Iwog would believe him, he is a handsome devil, and they speak the same language, Outofmyassanese.

michaelsch   befriend   ignore   Thu, 29 Nov 2012, 3:54am PST   Share   Quote   Like (3)   Dislike     Comment 4

And they complain about food stamps expenses.

iwog   befriend   ignore   Thu, 29 Nov 2012, 4:04am PST   Share   Quote   Like   Dislike (2)     Comment 5

CaptainShuddup says

That's a goddamn lie Iwog told me it was all paid back.

I said nothing of the sort.

CaptainShuddup says

Though I can understand why Iwog would believe him, he is a handsome devil, and they speak the same language, Outofmyassanese.

Wow, mentioned twice in one post in a thread I wasn't participating in. I'm honored!

iwog   befriend   ignore   Thu, 29 Nov 2012, 4:13am PST   Share   Quote   Like (1)   Dislike (1)     Comment 6

iwog   befriend   ignore   Thu, 29 Nov 2012, 4:22am PST   Share   Quote   Like   Dislike (1)     Comment 7

I dug deeper into the actual audit itself and found numerous misunderstandings and misrepresentations by the article.

For example here's a breakdown of the $16 trillion:

Unless you read the explanation however, these numbers are totally meaningless and DO NOT represent $16 trillion lent by the fed. From the audit:

Table 8 aggregates total dollar transaction amounts by adding the total dollar amount of all loans butdoes not adjust these amounts to reflect differences across programs inthe term over which loans were outstanding. For example, an overnightPDCF loan of $10 billion that was renewed daily at the same level for 30business days would result in an aggregate amount borrowed of $300billion although the institution, in effect, borrowed only $10 billion over 30 days. In contrast, a TAF loan of $10 billion extended over a 1-monthperiod would appear as $10 billion. As a result, the total transactionamounts shown in table 8 for PDCF are not directly comparable to thetotal transaction amounts shown for TAF and other programs that madeloans for periods longer than overnight.

Overnight lending by the federal reserve to banks and governments has ALWAYS been a function of the federal reserve. The only significant difference between now and days past is that the money is essentially at 0%.

Goran_K   befriend   ignore   Thu, 29 Nov 2012, 4:59am PST   Share   Quote   Like (1)   Dislike (1)     Comment 8

CaptainShuddup says

they speak the same language, Outofmyassanese.

I've had Iwog on ignore for a while, but I'm glad to see things haven't changed. :)

david1   befriend   ignore   Thu, 29 Nov 2012, 5:01am PST   Share   Quote   Like   Dislike     Comment 9

iwog says

I dug deeper into the actual audit itself and found numerous misunderstandings and misrepresentations by the article.

What, you mean to tell me a Paulbot blogger misrepresented a story about the evil Federal Reserve?

The hell you say.

I had this same conversation on patrick.net a few months back about a (I think was a) Forbes article re: TARP.

That article was the same thing: Banks borrowed money, they paid it back, borrowed again. The article reported the total loaned money, not the maximum loaned at any time.

The maximum risk to the taxpayer at any one time was many times less than $16T.

The audit found that the Federal Reserve made overnight loans to banks? What? Who authorized them to do that?

http://en.wikipedia.org/wiki/Federal_Reserve_Act

Oh.

michaelsch   befriend   ignore   Thu, 29 Nov 2012, 6:10am PST   Share   Quote   Like   Dislike     Comment 10

iwog says

I dug deeper into the actual audit itself

Provide a link pleeeeese!!!!

david1   befriend   ignore   Thu, 29 Nov 2012, 8:15am PST   Share   Quote   Like   Dislike     Comment 11

michaelsch says

iwog says

I dug deeper into the actual audit itself

Provide a link pleeeeese!!!!

If you follow the link in the OP, you have it. He posted a screenshot of it.

Aw fuck it.

http://www.sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf

TechGromit   befriend   ignore   Thu, 29 Nov 2012, 11:37am PST   Share   Quote   Like   Dislike (2)     Comment 12

Patrick says

The Federal Reserve should not exist.

Blasphemy! Before the creation of the federal reserve, the country suffered an economic depression / deep recession roughly every 2 to 3 years. One of them as 5 1/2 years long, several others longer than 4 years. Since the creation of the Federal Reserve recessions have been shorter in duration (averaging 1 year) and farther apart (an average of every 6 years).

The Federal Reserve does a lot to stabilize the economy. The federal reserve may not be perfect, but it is certainly better than anything we had before.

Patrick   befriend   ignore   Thu, 29 Nov 2012, 11:47am PST   Share   Quote   Like (4)   Dislike     Comment 13

The Federal Reserve itself caused the latest recession with irresponsibly low interest rates after the dot-com bubble.

I have not seen any convincing evidence that the Federal Reserve has benefitted anyone except bankers.

And just as a matter of principle, central planning of the economy is offensive.

JohnLaw   befriend   ignore   Thu, 29 Nov 2012, 11:49am PST   Share   Quote   Like (2)   Dislike     Comment 14

TechGromit says

Since the creation of the Federal Reserve recessions have been shorter in duration (averaging 1 year) and farther apart (an average of every 6 years).

Like that little recession known as the Great Depression? As I recall, the FED was around back then.

Patrick   befriend   ignore   Thu, 29 Nov 2012, 11:51am PST   Share   Quote   Like (3)   Dislike     Comment 15

Yeah, they weren't too good at preventing the Great Depression either, were they?

Funny I forgot about that one. Myopia.

Bellingham Bill   befriend   ignore   Thu, 29 Nov 2012, 11:55am PST   Share   Quote   Like (1)   Dislike (1)     Comment 16

Patrick says

caused the latest recession with irresponsibly low interest rates after the dot-com bubble.

This is incorrect. Rising interest rates of 2006 did not cause the crash, so saying the corresponding cuts were responsible is not getting at the true dynamic going on last decade.

The crash came from all the suicide lending running out of borrowers able to overpay for the houses, ca 2007.

This topped out the home equity withdrawal cycle in 2007, and then Down Goes Frazier.

The Greenspan interest rate cuts certainly got the used home market moving up, but so did the 2001-2003 tax cuts.

That was just the boom. The bubble of 2005-2007 was from the unsustainable suicide lending. Fraud, basically: negative-am borrowing, stated income loans, and qualifying people on the 2 year teaser rates (all lending practices that have been banned now).

The Fed had oversight responsibility here, but nobody cared. The Dems in the minority like Barney Frank didn't cover themselves in glory raising any red flags in protest. Quite the opposite in Frank's case.

Bellingham Bill   befriend   ignore   Thu, 29 Nov 2012, 12:12pm PST   Share   Quote   Like   Dislike     Comment 17

http://research.stlouisfed.org/fred2/graph/?g=dh6

blue shows home values topped out in 1Q06.

but red shows borrowers kept borrowing money through 2007 -- homedebt rose $1.4T in 2006-2007 period, ~$60B per month.

http://research.stlouisfed.org/fred2/graph/?g=dh8

makes it appear that the Fed was overstimulating the economy 2004-2006, but looking at fed rates too (red):

http://research.stlouisfed.org/fred2/graph/?g=dh9

shows that loan rates were decoupled from Fed policy during the bubble years.

The market had a mind of its own.

Patrick   befriend   ignore   Fri, 30 Nov 2012, 3:36am PST   Share   Quote   Like   Dislike     Comment 18

Bellingham Bill says

That was just the boom. The bubble of 2005-2007 was from the unsustainable suicide lending. Fraud, basically: negative-am borrowing, stated income loans, and qualifying people on the 2 year teaser rates (all lending practices that have been banned now).

The Fed had oversight responsibility here, but nobody cared. The Dems in the minority like Barney Frank didn't cover themselves in glory raising any red flags in protest. Quite the opposite in Frank's case.

True, everyone concentrates on the Fed's role in interest rates, but from working at Wells Fargo I remember that they also have oversight over lending standards, and can choose to look the other way or not when banks loosen up lending.

Bellingham Bill   befriend   ignore   Fri, 30 Nov 2012, 3:44am PST   Share   Quote   Like   Dislike     Comment 19

I can't believe somebody "Disliked" my 7:55pm above.

What I said was completely factual on all points.

iwog   befriend   ignore   Fri, 30 Nov 2012, 3:50am PST   Share   Quote   Like   Dislike (2)     Comment 20

Bellingham Bill says

I can't believe somebody "Disliked" my 7:55pm above.

What I said was completely factual on all points.

That and eight bits will buy you a coffee at McDonald's.

You gotta make people laugh here or say something amazingly profound to get the likes. Apocalypsefuck is a professional at it.

Dan8267   befriend   ignore   Fri, 30 Nov 2012, 5:01am PST   Share   Quote   Like (2)   Dislike     Comment 21

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

That says everything. The entire debt could have been paid back and there would have been more than enough money to eliminate the deficit as well. Instead, we bailed out a few too-big-too-fail banks for getting greedy during the housing bubble that has kept us all renters or fucked borrowers.

And where did the Fed get that $16 trillion from? Was it from producing goods and services? No. They got it from you and me through inflation. They literally stole this $16 trillion from our pocketbooks. That's $53,333 from every man, woman, and child in America. That's $140,060 from every household in America according to the 2010 census.

Geeze, couldn't you do something better with $140K tax free than bail out some old banker? You could buy a house for that. And that's just what the Federal Reserve stole from you this one time. Over your lifetime, they steal the majority of your money. No wonder they don't want to be audited. In other news, rapists cry out against DNA tests.

Dan8267   befriend   ignore   Fri, 30 Nov 2012, 5:05am PST   Share   Quote   Like (1)   Dislike     Comment 22

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
and many many more including banks in Belgium of all places

These banks should have to pay credit normal 17% credit card rates on those loans and a cash-advancement fee of 4%, just like these banks charge.

iwog   befriend   ignore   Fri, 30 Nov 2012, 5:23am PST   Share   Quote   Like   Dislike     Comment 23

$16 trillion was never lent/given to anyone. It's an aggregate total that is being misused in the political press.

While I agree that Citigroup should have been nationalized and carved up instead of bailed out, they did not in fact receive $2.5 trillion and they have paid most or all of what they did receive back to the fed.

ja   befriend   ignore   Fri, 30 Nov 2012, 5:40am PST   Share   Quote   Like   Dislike     Comment 24

Didn't we decide this was a myth?

http://www.hks.harvard.edu/var/ezp_site/storage/fckeditor/file/pdfs/centers-programs/centers/taubman/PB_housing_2010_final.pdf

Patrick says

The Federal Reserve itself caused the latest recession with irresponsibly low interest rates after the dot-com bubble.

I have not seen any convincing evidence that the Federal Reserve has benefitted anyone except bankers.

And just as a matter of principle, central planning of the economy is offensive.

Patrick   befriend   ignore   Fri, 30 Nov 2012, 5:44am PST   Share   Quote   Like   Dislike     Comment 25

iwog says

While I agree that Citigroup should have been nationalized and carved up instead of bailed out, they did not in fact receive $2.5 trillion and they have paid most or all of what they did receive back to the fed.

Sure looks like Citigroup did in fact receive $2.5 trillion, most of which was via the Primary Dealer Credit Facility:

http://en.wikipedia.org/wiki/Primary_Dealer_Credit_Facility

The creation of the Primary Dealer Credit Facility constitutes the first time in the history of the Federal Reserve that the Fed has lent directly to investment banks, and it reflects the severity of the financial crisis perceived by Federal Reserve Chairman Ben Bernanke.[3] Non-bank institutions such as investment banks exist outside the Fed's regulatory structure. A full detail of the nominal value of loans outstanding through the PDCF is available in the Federal Reserve's public balance sheet.[4]

iwog   befriend   ignore   Fri, 30 Nov 2012, 5:47am PST   Share   Quote   Like   Dislike     Comment 26

Patrick says

Sure looks like Citigroup did in fact receive $2.5 trillion, most of which was via the Primary Dealer Credit Facility:

PDCF loans are overnight loans and the $2 trillion is aggregate. That means if Citigroup borrowed and paid back $10 billion per day for a whole month, it would be counted as $300 billion.

Citibank would have no use for $2.5 trillion since their total liabilities from all sources do not exceed $1.2 trillion. That's what I mean by these numbers being misused.

JohnLaw   befriend   ignore   Fri, 30 Nov 2012, 5:49am PST   Share   Quote   Like (3)   Dislike     Comment 27

iwog says

they have paid most or all of what they did receive back to the fed.

With all due respect, when any of the NY bankers say they "paid it back" they need to change that statement to, "savers were forced to pay it back through financial repression." Until the FED opens it's lending window to the general public who will then be able to borrow unlimited sums at negative real interest rates, the banks did nothing. The public, and especially savers, still pays for their mistakes. As far as I'm concerned banker compensation needs to be capped at USG civil servant wage scales because without the USG and the FED and the taxpayers, most would not even have a job and the remaining would be in an industry a fraction of the size it is today.

All of the NYC money center banks that had to borrow funds from the FED should have been nationalized, held in receivership, bondholders haircuts to all and then resold!

iwog   befriend   ignore   Fri, 30 Nov 2012, 5:59am PST   Share   Quote   Like (1)   Dislike     Comment 28

JohnLaw says

With all due respect, when any of the NY bankers say they "paid it back" they need to change that statement to, "savers were forced to pay it back through financial repression."

I agree with you completely that the government and the fed should not be in the business of enriching banks. I think that it's an abomination that the CEO of Citibank is paid millions of dollars a year for doing nothing more than taking free money and charging Americans interest on it.

I just want to make sure we're not feeding the media trolls by insisting $16 trillion was printed up and distributed around the world. It wasn't.

Patrick   befriend   ignore   Fri, 30 Nov 2012, 6:03am PST   Share   Quote   Like (1)   Dislike     Comment 29

Ah, I see the explanations now, above and below this table:

http://www.scribd.com/doc/60553686/GAO-Fed-Investigation#outer_page_144

So while the total loans made to Citigroup were indeed $2.5 trillion, most of them were very short. So when you multiply out the days times amounts, Citigroup alone got the equivalent of $58 billion loaned to them at near-zero interest for one year.

For all the banks, the term-adjusted loans were $1.139 trillion for one year, at public expense.

Still very good work if you can get it.

iwog   befriend   ignore   Fri, 30 Nov 2012, 6:05am PST   Share   Quote   Like   Dislike     Comment 30

Patrick says

Still very good work if you can get it.

If someone loaned me $100 billion for a month, I guarantee I would pay it back and never have to work again.

Bellingham Bill   befriend