June 2009


House Committee Subpoenas Federal Reserve

by Daniel Tencer

June 9, 2009

from RawStory Website

The congressional panel investigating what happened to all that bank bailout money has issued a subpoena to the Federal Reserve, asking them to hand over all documents relating to the takeover of Merrill Lynch by the Bank of America.


On January 1, BofA finalized its purchase of Merrill Lynch for just over $29.1 billion.


That made the bank eligible for an additional $20 billion in federal rescue money, bringing BofA's total to some $45 billion. Now, Reps.


Dennis Kucinich (D-OH) and Edolphus Towns (D-NY) want to know exactly what the banks and the Federal Reserve agreed to when they arranged the deal last year.

Full text of the press release from Kucinich's office:

Washington D.C.

(June 8, 2009)

House Oversight and Government Reform Committee Chairman Edolphus Towns (D-NY) and Ranking Member Darrell Issa (R-CA) today served a subpoena on the Federal Reserve (the Fed) to compel it to turn over documents related to Bank of America’s acquisition of Merrill Lynch.

The full committee and Domestic Policy Subcommittee, under the leadership of Chairman Dennis Kucinich (D-OH), have been investigating the circumstances surrounding the federal government’s bailout of the Bank of America-Merrill Lynch transaction. Specific documents subpoenaed include emails, notes of conversations and other documents.

New York Attorney-General Andrew Cuomo has claimed that, in 2008, then-Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke strong-armed BofA into buying Merrill - a move that, if true, could expose Paulson and Bernanke to prosecution.

Last week, news services reported that the House had asked Bank of America CEO Kenneth Lewis to testify before the House Committee on Oversight and Government Reform.


That hearing takes place on Thursday (June 11).



HR 1207 - Battle To Audit The Fed Has Only Just Begun
Senate may block Ron Paul's legislation unless companion bill wins support
Steve Watson
June 12, 2009
from Infowars Website

A great victory in the ongoing battle to wrestle back control of US monetary policy from privately owned special interests was won yesterday with the announcement that HR-1207, Ron Paul's "audit the Fed" bill, will be debated by the full House of Representatives.

Months of activism on behalf of the Texas Congressman's supporters finally paid off as Ohio Democratic Congressman Dennis Kucinich became the bill’s 218th co-sponsor, giving the bill the majority support it needed to move out of committee.

Though this is indeed cause for celebration, a much greater effort will be needed to ensure the bill is passed into law. Before today, HR 1207's companion bill in the Senate, S 604 The Federal Reserve Sunshine act, had no co-sponsors at all.


Ron Paul's Campaign For Liberty has since reported that Sen. Jim DeMint (R-SC) has become the first cosponsor of S 604.

"We still have a long way to go before we pass real legislation to Audit the Fed, but this is yet another major step toward our ultimate goal." writes Ron Paul's Communications Director Jesse Benton.


"Sen. DeMint is highly respected and one of the most principled conservatives in Washington. Bernie Sanders (I-VT), 604's lead sponsor, is a firebrand Independent progressive. To see these two guys on a bill together has to tell you that something special is going on." Benson writes.

Without support for S 604, the Senate may be able to block HR 1207 and other legislation seeking to audit the Fed. And given that the Fed is set to do everything in its power to shoot down such legislation, we need to act fast.

We must get this bill some support, and make sure HR 1207 doesn't get watered down along the way.

The key Senators to pressure on this bill are:

If passed, HR-1207 will ensure that the Fed make public the destination of the trillions in taxpayer “loans” that have been simply handed over to private banks without oversight.

Bernanke will be seated before Congress and forced to answer these questions instead of worming his way out of them, citing "extraordinary circumstances" and the like, as we have seen him do over and over for the past eight months.

The bill, if it becomes law, will expose how the Fed has consistently engaged the inflation of the currency for the gain of a few elite international bankers, further exposing how this kind of criminal action has directly led to financial crises and recessions for decades.

An audit would set the stage for the end of fraudulent fractional reserve banking and a return of honest money and fiscal policies.


Fed Would Be Shut Down If It Were Audited, Expert Says
10 Jun 2009

from CNBC Website

The Federal Reserve's balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit, Jim Grant, editor of Grant's Interest Rate Observer, told CNBC.


With $45 billion in capital and $2.1 trillion in assets, the central bank would not withstand the scrutiny normally afforded other institutions, Grant said in a live interview.

"If the Fed examiners were set upon the Fed's own documents—unlabeled documents—to pass judgment on the Fed's capacity to survive the difficulties it faces in credit, it would shut this institution down," he said. "The Fed is undercapitalized in a way that Citicorp is undercapitalized."

Grant said he would support legislation currently making its way through Congress calling for an audit of the Fed.

Moreover, he criticized the way the Fed has managed the financial crisis, saying the central bank's target rate should not be around zero.

"I think zero is the wrong rate for almost any economy," Grant said, adding the Fed has "embarked on a vast experiment in moral hazard. Interest rates are the traffic signals in a market economy, and everything's green... You have to wonder whether these interest rates are the right clearing rate or rather they are the imposition of a central bank."

Amid a disparity between analysts predicting there will be no rate hikes soon and the fed funds futures indicating tightening by the end of the year, Grant said he thinks the Fed indeed will begin raising rates as inflation creeps into the picture.

Fed funds futures have fully priced in as much as a half-point rise in the target rate from its current range of zero to 0.25 percent.

"If the hairs on the back of your neck stand up when there's too much unanimity of opinion, then one begins to worry about this," he said. "The Fed proverbially has been late."



Jim Grant, editor of Grant's Interest Rate Observer,

criticizes the performance of the Federal Reserve.

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