Bernie Sanders accountability study finds USD16*10^12...

[Terralthra]

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."
To read the GAO report, click here.

I already knew this was happening, a lot of it funneled through backing AIG's CDS payments, but hearing the GAO cite the numbers makes it even more clear.

[weemadando]

Sixteen trillion?

Fucking VIVA! people, goddamn.

And outsourcing the govt emergency loans program on that scale to the same pack of economic psychopaths who fucked the world the first time?

Unbelievable.

[Lord Zentei]

16 trillion is not a surprise, honestly. I hate to say it, but there you go.

Dr Evil was an amateur.

[J]

Look on the bright side, we now know where these missing trillions went.
Isn't that worth it?

[Starglider]

Careful, you're getting dangerously close to admitting that Ron Paul might actually have a point.

[Einhander Sn0m4n]

Good on Mr. Sanders. The criminals must be indicted and upon proof of guilt given life sentences with no parole and all their assets seized and auctioned off to fund social safety net services.

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."

To read the GAO report, click here.

Quoted with formatting that doesn't make eyes bleed. Did you actually remove the paragraph breaks when you posted that?

[Forgothrax]

16 trillion? Pfft. Pocket change. Watch as our loyal Congresscum unite in a brilliant display of bipartisanship to get this swept under the rug and forgotten, with slaps on the wrists (at best) for the offenders.

[Terralthra]

Good on Mr. Sanders. The criminals must be indicted and upon proof of guilt given life sentences with no parole and all their assets seized and auctioned off to fund social safety net services.

Quoted with formatting that doesn't make eyes bleed. Did you actually remove the paragraph breaks when you posted that?

The paragraph breaks in the original were done with <p> tags, which apparently were converted to <br /> by the board software.

[K. A. Pital]

16 trillion, am I reading this correctly? A tad larger than the US yearly GDP, right? I love it. London looters have got nothing on 'em.

[bobalot]

Careful, you're getting dangerously close to admitting that Ron Paul might actually have a point.

Instead of posting some vague paultard bullshit (that currently clogs up nearly every fucking orifice of the internet), could you perhaps elaborate?

[K. A. Pital]

Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.

Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.

Even if Ron Paul's solution is "destroy the machines" (let the market collapse for the sake of the free market itself), his comment about debt shove-around was more or less sensible.

[bobalot]

I have wondered why nobody is proposing the approach that the Swedes took when their banking crisis hit.

Instead of just taking on bad debts by the government, they partly nationalized the banks and forced them to write down bad debts. Only after these write downs, did the government recapitalize the banks and sell them off.

[K. A. Pital]

I have wondered why nobody is proposing the approach that the Swedes took when their banking crisis hit.

Do you really wonder why or you just dislike the answer?

[Lord Zentei]

Careful, you're getting dangerously close to admitting that Ron Paul might actually have a point.

Instead of posting some vague paultard bullshit (that currently clogs up nearly every fucking orifice of the internet), could you perhaps elaborate?

Perhaps it has something to do with the fact that the "Bernie Sanders accountability study" should really be called the "Ron Paul, Alan Grayson accountability study", since it was ultimately based on their amendments to the Dodd-Frank bill?

While Bernie Sanders (along with Jim DeMint) led the charge for the bill's adoption in the Senate, he also helped water down the language of the bill.

But as per usual, Ron Paul is the Invisible Man of politics. If his existence is not being ignored by the mainstream media, it's being ignored by the left-wing areas of the blogosphere.

[Johonebesus]

I have wondered why nobody is proposing the approach that the Swedes took when their banking crisis hit.

Instead of just taking on bad debts by the government, they partly nationalized the banks and forced them to write down bad debts. Only after these write downs, did the government recapitalize the banks and sell them off.

According to Ron Suskind, who interviewed the President and administration officials for his book, Obama did order a plan to nationalize Citibank based on Sweden's program and Geithner flatly refused.

[Sea Skimmer]

Can someone point out the pages of that report which actually give a figure, or figures adding to 16 trillion because I can't find that much money in it.

[Terralthra]

Careful, you're getting dangerously close to admitting that Ron Paul might actually have a point.

Instead of posting some vague paultard bullshit (that currently clogs up nearly every fucking orifice of the internet), could you perhaps elaborate?

Perhaps it has something to do with the fact that the "Bernie Sanders accountability study" should really be called the "Ron Paul, Alan Grayson accountability study", since it was ultimately based on their amendments to the Dodd-Frank bill?

While Bernie Sanders (along with Jim DeMint) led the charge for the bill's adoption in the Senate, he also helped water down the language of the bill.

But as per usual, Ron Paul is the Invisible Man of politics. If his existence is not being ignored by the mainstream media, it's being ignored by the left-wing areas of the blogosphere.

Left-wing areas of the blogosphere like...Bernie Sanders' Senatorial website? If Ron Paul wanted attention for it, he should've posted it to his Congressional website. Instead, the press releases there are along these lines:

WASHINGTON, DC – Congressman Ron Paul, Chairman of the Domestic Monetary Policy and Technology Subcommittee, announced today that the subcommittee will hold a hearing on legislation to restore sound money to the economy through competition.

H.R. 1098, the Free Competition in Currency Act of 2011, would allow competitive free market forces to provide sound money through choice in currency. The bill repeals federal legal tender laws, repeals restrictions on private mints, and repeals taxes on gold and silver which prevent them from circulating as forms of payment. The hearing will discuss the need for and efficacy of sound money, the means by which sound money can be achieved through measures such as H.R. 1098, and the constitutional role of government in money.

"For too long the Federal Reserve has exercised a monopoly on currency issuance," Chairman Paul stated. "The result, predictably, has been an increasingly devalued dollar. We have been experimenting with a pure fiat currency system nationally and internationally for 40 years, and it has been proven unsound and unsustainable. Our fiat system helped create the massive debt crisis we find ourselves in, and has eroded the purchasing power of every American. The American people deserve to have a choice of currencies to protect themselves and their families from the poor decisions of government. Serious monetary reform is needed, and this hearing is the first step towards addressing this crucial issue. I am pleased that the subcommittee will be examining ways to return to sound money," Paul continued.

The hearing, entitled "Road Map to Sound Money: A Legislative Hearing on H.R. 1098 and Restoring the Dollar," will be held on Tuesday, September 13, at 2:00 p.m. in Room 2128 of the Rayburn House Office Building.

Witnesses scheduled to testify:

Dr. Lawrence M. Parks, Executive Director, Foundati]Ron Paul's website[/url]"]on for the Advancement of Monetary Education

Dr. Lawrence H. White, Professor of Economics, George Mason University

Additional witnesses to be announced.

Can someone point out the pages of that report which actually give a figure, or figures adding to 16 trillion because I can't find that much money in it.

Page 131. Dollar amounts in billions, total loans at the bottom right corner shows $16,115.

[Simon_Jester]

Is Paul proposing to let private banks print money or something? We tried that back in the 1800s; it was a disaster for all sorts of reasons.

[Terralthra]

Is Paul proposing to let private banks print money or something? We tried that back in the 1800s; it was a disaster for all sorts of reasons.

Essentially, yes. His argument (supported by certain economics professors) is that the reason the Free Banking era didn't turn out very well is that banks were required to deposit securities with state authorities, in many cases depositing securities in the form of state government bonds, which depreciated and caused the instability of the currency. He (and they) see it as a failure of inappropriate regulation, and that if the banks issuing the notes were free to secure (or not, I guess) their tender however they see fit, there would be no issue.

I am not sufficiently well-informed to be able to argue that one way or another.

[Lord Zentei]

Left-wing areas of the blogosphere like...Bernie Sanders' Senatorial website? If Ron Paul wanted attention for it, he should've posted it to his Congressional website.

I don't really care whether or not he wants credit for it, but it's pretty ignorant to be outright dismissive of him when discussing these findings given the context, don't you think?

[Simon_Jester]

Left-wing areas of the blogosphere like...Bernie Sanders' Senatorial website? If Ron Paul wanted attention for it, he should've posted it to his Congressional website.

I don't really care whether or not he wants credit for it, but it's pretty ignorant to be outright dismissive of him when discussing these findings given the context, don't you think?

I think dismissal of him here comes from the fact that his name is not associated with the report in a high-profile way.

Criticism of the Fed's behavior and the massive fourteen-figure sums being thrown at the financial sector by the government comes from all over the political compass- grouchy old conservatives who want a small government because that's what we had in 1850 when men were men and women were women, socialists who think capitalism is a plague upon our nation, libertarians who think it would all work fine if we just let the chips fall where they may...

It's not unique to any one area. So if Sanders puts his name on the study and Paul doesn't, people who didn't already know a lot about the study won't associate Paul with it.

[Lord Zentei]

Yes, I know that's the reason. But as it stands, this has been a theme of his for the past 30 years, including when hardly anyone else was talking about it. He's consistently been not just "that crazy old anti-government guy", but "that crazy old anti-Fed guy" too.

OTOH, while he may have accurate instincts on a number of points, he's not a savvy political player. Regardless, the media's ignoring him is bullshit.

[Terralthra]

Left-wing areas of the blogosphere like...Bernie Sanders' Senatorial website? If Ron Paul wanted attention for it, he should've posted it to his Congressional website.

I don't really care whether or not he wants credit for it, but it's pretty ignorant to be outright dismissive of him when discussing these findings given the context, don't you think?

Since his own website condemns the amendment which produced this report, no, I don't have any problems not associating him with it. Ron Paul is far from the only politician interested in the amounts and recipients of Fed loans and loan guarantees. When his legislation passes, I'll happily associate it with him.

[MarshalPurnell]

As is explained in the actual report, the loans were routine emergency transactions used to cover a bank's cash reserves temporarily. If a bank falls short of mandated reserves it borrows money from the Fed (aka the lender of last resort), holds the money for a day or two until its reserves replenish, then pays back the loan. A loan of $100 billion taken and repaid 10 times in succession does not mean the Fed "gave" the bank $1 trillion dollars, which is the methodology being used to get the $16 trillion figure. The front page of the GAO thread indicates that total outstanding loans peaked at no more than $1 trillion in late 2008, during the worst of the bank crisis and when the alternative was probably a complete collapse of the financial system. The scandal is in how the Fed contracted out management services to private companies on a noncompetitive basis, with a total cost of $659.4 million dollars. The "sixteen trillion dollars" were all paid back and remain in the Fed emergency reserve system.

[Lord Zentei]

Since his own website condemns the amendment which produced this report, no, I don't have any problems not associating him with it. Ron Paul is far from the only politician interested in the amounts and recipients of Fed loans and loan guarantees. When his legislation passes, I'll happily associate it with him.

What the hell, are you fucking stupid? Didn't you read the link you posted?

There is a difference between simply criticizing a report and criticizing it for not going far enough. The very page you linked to shows that the Sanders amendment incorporated language from Ron Paul and Alan Grayson's original bill. It then criticizes him for subsequently watering down that amendment due to pressure from Obama.

And regardless of how you slice it, this certainly doesn't warrant ignorant comments like this one:

Instead of posting some vague paultard bullshit (that currently clogs up nearly every fucking orifice of the internet), could you perhaps elaborate?

Which was the comment that started this tangent.