House Committee Subpoenas Federal Reserve
by Daniel Tencer
June 9, 2009
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
On January 1, BofA finalized its purchase of Merrill Lynch for just over
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
Full text of the press release from Kucinich's office:
(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
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
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
by Steve Watson
June 12, 2009
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
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.
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
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.