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ABC: Federal Reserve Board Rife With Conflict of Interest, GAO Report

SnyderShrugged

By SnyderShrugged
in The Tailgate

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SnyderShrugged

SnyderShrugged

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http://abcnews.go.com/blogs/politics/2011/10/federal-reserve-board-rife-with-conflict-of-interest-gao-report/

Several financial firms and corporations reaped monetary benefits from their executives’ close ties to the Federal Reserve, and the makeup of its board of directors poses a major conflict of interest, according to a new report released today by the Government Accountability Office.

In one case, the Federal Reserve consulted with General Electric on the creation of a commercial paper funding facility and then provided $16 billion in financing to the company while its chief executive, Jeffrey Immelt, served as a director on the board of the Federal Reserve Bank of New York. Immelt is now President Obama’s “jobs czar.”

JP Morgan Chase also benefited from its chief executive Jamie Dimon’s position on the board of the Federal Reserve Bank of New York, according to the GAO. The bank received emergency loans from the Federal Reserve at the same time it served as the clearinghouse for the Fed’s emergency lending program.

Dimon, who remains on the board, also managed to get the Federal Reserve to give his bank an 18-month exemption from risk-based leverage and capital requirements in 2008, the same year that the Fed gave JP Morgan Chase $29 billion to acquire Bear Stearns, according to the GAO.

Many of the Fed’s own executives own stock in companies that are regulated by the agency, and the Fed is not required to disclose its waivers. At the end of 2008, Goldman Sachs received permission from the Fed to become a bank holding company and get cheap access to loans from the Fed while Stephen Friedman, then chairman of the New York Federal Reserve’s board of directors, owned shares in Goldman Sachs and sat on its board of directors. The Fed gave Friedman a waiver from its conflict of interest rules but did not publicly disclose it.

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Destino

Destino

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shocking........

You beat me to it. Every seat the government has on the financial side of things is occupied by someone with an obvious conflict of interest or someone that is closely associated with someone who does. The government turns a blind eye to corruption and innapropriate behavior. It's not limited to the fed either. Freddie and Fannie were run the same way and the military is not lacking "golden parachutes" either.

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hokie4redskins

hokie4redskins

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You beat me to it. Every seat the government has on the financial side of things is occupied by someone with an obvious conflict of interest or someone that is closely associated with someone who does. The government turns a blind eye to corruption and innapropriate behavior. It's not limited to the fed either. Freddie and Fannie were run the same way and the military is not lacking "golden parachutes" either.

What seat does the government hold at the Federal Reserve? You know it's a private bank, right?

And the government doesn't turn a blind eye. They're in cahoots. It's corporatism.

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PeterMP

PeterMP

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What seat does the government hold at the Federal Reserve? You know it's a private bank, right?

And the government doesn't turn a blind eye. They're in cahoots. It's corporatism.

What other private organization has its board of governors selected by the President and approved by Congress?

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PeterMP

PeterMP

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Dog and Pony show for the masses. If you believe that the POTUS or Congress has any say or influence of who runs the FR and how they run it, then I don't know what to tell you. If I recall, you also believe the dollar has viability too.

It appears to me that you could make the same argument about the Dept. of Treasury (e.g. The appointment and approval of the Sec. of Treasury is a dog and pony show that is really directed by Wall Street), but that doesn't make it a private entity.

That makes it a public entity of which our government has lost or ceded control to Wall Street- not a private one.

The dollar is as viable as any other currency in the world (and in most cases more viable). Why wouldn't it be?

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SnyderShrugged

SnyderShrugged

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according to the Fed itself, they are Independent(private) within the Government.

http://www.federalreserve.gov/pf/pdf/pf_1.pdf#page=4

The Federal Reserve System is considered to be an independent central

bank because its decisions do not have to be ratified by the President or

anyone else in the executive branch of government. The System is, however, subject to oversight by the U.S. Congress. The Federal Reserve must

work within the framework of the overall objectives of economic and

financial policy established by the government; therefore, the description

of the System as “independent within the government” is more accurate.

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PeterMP

PeterMP

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according to the Fed itself, they are Independent(private) within the Government.

http://www.federalreserve.gov/pf/pdf/pf_1.pdf#page=4

The Federal Reserve System is considered to be an independent central

bank because its decisions do not have to be ratified by the President or

anyone else in the executive branch of government. The System is, however, subject to oversight by the U.S. Congress. The Federal Reserve must

work within the framework of the overall objectives of economic and

financial policy established by the government; therefore, the description

of the System as “independent within the government” is more accurate.

They are an organization that has private and public qualities to them.

They are "independent" under the current law because of the length of the Chairmans term, and the nature of the law that established the Fed, but Congress (w/ a signature from the President) could change the law tomorrow and there is nothing the Fed could do about it (other than what they do with respect to controlling our elections by controlling where campaign money goes).

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SnyderShrugged

SnyderShrugged

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They are an organization that has private and public qualities to them.

They are "independent" under the current law because of the length of the Chairmans term, and the nature of the law that established the Fed, but Congress (w/ a signature from the President) could change the law tomorrow and there is nothing the Fed could do about it (other than what they do with respect to controlling our elections by controlling where campaign money goes).

Yep, cant argue with the potential of "tomorrow" and all the what ifs that go with it. I agree completely on that. But as it stands today, they are a private organization with ties to the Federal government.

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SnyderShrugged

SnyderShrugged

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I think the Fed is necessary and generally disagree with the suggestions that it be abolished, but I have no problems with reforms designed to mitigate conflicts of interest.

I'd be happy with a simple, yet all inclusive independent audit with the results released to the public for all to see

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ncr2h

ncr2h

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I'd be happy with a simple, yet all inclusive independent audit with the results released to the public for all to see

I don't know if "happy" was the right choice of words there. After all, they did a partial audit and found over $15T had been loaned to bail out European banks...goodness gracious.

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PeterMP

PeterMP

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Yep, cant argue with the potential of "tomorrow" and all the what ifs that go with it. I agree completely on that. But as it stands today, they are a private organization with ties to the Federal government.

There's a difference between private and independent.

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Predicto

Predicto

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No, its a legal fact. Other than that, its meaningless to me too.

As a lawyer, I can tell you that is not a "legal fact."

It is a definitional game, and I have no idea why it matters either way. The Fed is what it is. People who insist on calling it "private" (or "public") as though it makes a big difference are doing so to make some other point, one which is probably not very compelling.

---------- Post added October-19th-2011 at 12:57 PM ----------

I don't know if "happy" was the right choice of words there. After all, they did a partial audit and found over $15T had been loaned to bail out European banks...goodness gracious.

Err, what? Got a link to that story?

(I suspect the story uses a very different definition of "loaned" than most people expect).

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SnyderShrugged

SnyderShrugged

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As a lawyer, I can tell you that is not a "legal fact."

It is a definitional game, and I have no idea why it matters either way. The Fed is what it is. People who insist on calling it "private" (or "public") as though it makes a big difference are doing so to make some other point, one which is probably not very compelling.

---------- Post added October-19th-2011 at 12:57 PM ----------

Err, what? Got a link to that story?

(I suspect the story uses a very different definition of "loaned" than most people expect).

I'm not saying it to "make a point", just a desire for accuracy. Its a strange mix of Federal and independent that it can make the head spin!

And it isnt a definitional perspective, it is a legal fact. At least when it comes to Tort claims and liability of the organization

http://www.globalresearch.ca/index.php?context=va&aid=8518

---------- Post added October-19th-2011 at 04:04 PM ----------

How is it a legal fact?

What is the legal definition of a private organization?

because the courts have ruled on it, at least in terms of Tort claims

http://www.globalresearch.ca/index.php?context=va&aid=8518

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ncr2h

ncr2h

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As a lawyer, I can tell you that is not a "legal fact."

It is a definitional game, and I have no idea why it matters either way. The Fed is what it is. People who insist on calling it "private" (or "public") as though it makes a big difference are doing so to make some other point, one which is probably not very compelling.

---------- Post added October-19th-2011 at 12:57 PM ----------

Err, what? Got a link to that story?

(I suspect the story uses a very different definition of "loaned" than most people expect).

http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

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