Audit The Fed Effort Wins Support From An Unusual Coalition

fed_sealvia HuffPo:

“An unusual coalition of progressive economists, labor leaders, and bloggers has decided to fight back against a congressional amendment that would allow the Federal Reserve to continue operating in secrecy.”

November 18, 2009

House Financial Services Committee
2129 Rayburn House Office Building
Washington, D.C. 20515

Dear Chairman Frank, Ranking Member Bachus, and Members of the Committee,

During the past two years, the Federal Reserve dramatically changed its operating procedures. Instead of simply setting interest rates to influence macroeconomic conditions, it rapidly acquired a wide variety of private assets and extended massive secret bailouts to major financial institutions.

There are still many questions about the Fed’s behavior in these new activities, including potential cronyism and favoritism in its distribution of many trillions of dollars. As the Special Inspector General for the Troubled Assets Relief Program recently wrote about their bailout of AIG, the Fed’s “strategy to pursue concessions from counterparties offered little opportunity for success, even in light of the willingness of one counterparty to agree to concessions.”

The Federal Reserve balance sheet expanded to more than $2 trillion, along with implied and explicit backstops to Wall Street firms that could cost even more. Who received the money? Against what collateral? On what terms and conditions? The only way to find out is through a complete audit of the Federal Reserve. That’s why we support the Paul-Grayson amendment requiring a complete audit.

The Watt amendment does not repeal the existing provisions that prohibit a GAO audit of the Federal Reserve. In fact, it adds entirely new additional categories of restrictions. Instead of opening up the Fed’s secretive activities to public inspection, the Watt amendment cloaks it in further secrecy.

A vote for the Watt amendment is a vote for more secret bailouts. We urge you to support Paul-Grayson instead.

Sincerely,

Dean Baker, Economist, Center for Economic Policy Research
William Black, Professor of Economics and Law
Tyler Durden, Blogger, Zero Hedge
Thomas Ferguson, Professor of Political Science, University of Massachusetts, Boston
James K. Galbraith, Economist, University of Texas
Leo Gerard, President, United Steelworkers Union
Jane Hamsher, Blogger, Firedoglake.com
Rob Johnson, Economist
Naomi Klein, Author, No Logo and The Shock Doctrine
Yves Smith, Blogger, Naked Capitalism
Andrew Stern, President, SEIU
Richard Trumka, President, AFL-CIO
L. Randall Wray, Professor of Economics, Center for Full Employment and Price Stability

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  • emperorreagan

    What, does everyone in the US think that it's no longer a good idea to allow a private, secretive banking group to determine US monetary policy and to generally be in the driver's seat of the US economy?

    Well, everyone except for bankers & many politicians anyway…

  • Polymorpheous

    i love it

  • Ascendaeus

    it never was a good idea, i don't think, to hand over the country the same fuckheads that financed the south during the civil war. FR means there is no president, no people's house or court. It means that we have a king. and he doesn't even live here.

  • http://www.facebook.com/martin.grant2 Martin Grant

    Thank you baby Jesus for some one having enough common sense to put together this letter! When lefties and righties agree on an issue that is a great sign that whatever it is, it must be true…

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