Posted by Gary Howard on 11/20/09
Last updated 11/20/09

Below is just a sampling of the coverage that the adoption of the Audit the Fed amendment has received in the last 24 hours.Included are some links and excerpts:

House Panel Approves Broad Auditing of Federal Reserve  Wall Street Journal

A key House panel on Thursday approved an amendment offered by Rep. Ron Paul (R., Texas) to give federal watchdogs massive new authority to audit the Federal Reserve.

House panel approves Ron Paul's proposal to audit the Federal Reserve  Politico

The measure, based on a Paul proposal that has attracted more than 300 co-sponsors, passed, 43-26, as an amendment to a financial reform bill. Florida Democrat and fellow Fed critic Alan Grayson co-sponsored the amendment with Paul and played a leading role drumming up support for it among committee members. The adoption of this amendment is an extraordinary victory for Paul, whose libertarian, anti-Fed leanings have often been dismissed by the political establishment.

Panel votes to audit the Fed; cap its spending at $4 trillion MarketWatch

"If you care about transparency of the Fed, you would allow a look at monetary policy," Paul said. "We're dealing with trillions of dollars that doesn't get audited. There is no reason why the world can't know, eventually, what the Fed is doing."

Ron Paul wins a key battle in war to open Fed's books Los Angeles Times

"If we get the audit and get the books open, make them answer the questions, I am convinced that the American people will be so outraged that then we will have reform of the monetary system," Paul has said.

Panel Votes to Broaden Oversight of the Fed New York Times

Mr. Paul's bill would abolish a longstanding exemption that shielded the Fed from Congressional audits of its monetary policy. Supporters of the Fed's independence have argued the shield provided crucial insulation from political pressure, which would make it much harder for Fed officials to take unpopular action aimed at heading off inflation.

And of course, the defenders of the Fed were out in force (all of them former Fed employees by the way):

Greenspan, Volcker Opposed Ron Paul Audit Provision Wall Street Journal

Greenspan and Volcker, in a letter sent to the committee's chairman and ranking Republicans, warned that the provision threatened the ability of the Fed to foster price stability independent of political interference.

Threatening the Fed's independence  Washington Post

Alan S. Blinder is a former vice chairman of the Federal Reserve Board, is a professor of economics and public affairs at Princeton University.

...guess that's all that needs to be said on Blinder.

There are a few more hits on this story all over today, these are just a few.

Posted 11/20/09 BruceKoerber Cedar Rapids, IA

Let's get the opinion of the heroine addict: "Do you think the king pins of the heroine drug ring should be brought to justice?" Alan S. Blinder, much to the delight of Greenspan and Volker, replied: "No."

Posted 11/20/09 neiljones Valdosta, GA

http://www.reuters.com/article/marketsNews/idUSLK64730120091120

Posted 11/20/09 C00kieM0nster Oxnard, CA

Great news, however I doubt the Fed will go quietly. Is America ready to put in the fight? Hearts and minds made to suffer, as the cornered beast lashes out, will be open to long forgotten ideas. It will be the duty of on an enlightened few, to remind them of that which has been lost.

Posted 11/20/09 ledeagenda Middleton, ID

Great post. Good to see our early efforts and momentum have been carried on by the MSM.

Posted by Gary Howard on 11/20/09

Audit the Fed Amendment Passes House Committee

WASHINGTON-November 20, 2009 -During the House Financial Services Committee markup of the Financial Stability Improvement Act of 2009, Congressman Ron Paul's (R-TX) amendment to increase Federal Reserve transparency was passed by a vote of 43 to 26.

During the proceeding, parallel amendments were introduced, one by Paul, the other by Congressman Mel Watt (D-NC), which would have limited the audit to only a narrow examination of TARP funds and lending powers, and would have actually allowed the Fed to increase the secrecy under which they operate when it comes to setting monetary policy.

Rep. Paul's amendment inserted language that replaced Watt's, and is similar to that in his bill, H.R. 1207, which is co-sponsored by 311 members of the House of Representatives. The bill would allow for a full Government Accountability Office (GAO) audit of the Federal Reserve including emergency lending facilities, past decisions on setting interest rates and agreements with foreign central banks.

"We are happy to see the Financial Services Committee preserve a measure to bring true Fed transparency," said John Tate, President of Campaign for Liberty. "This amendment helps to ensure that real and complete audit legislation remains unaltered, and from here on out we will continue to push for a standalone floor vote of H.R. 1207."

Congressman Paul's amendment was greeted with a great deal of support, among those who strongly advocated for the amendment included Rep. Spencer Bachus (R-AL), who defended the measure throughout the proceeding and also voted for adoption of the amendment.

Posted by Gary Howard on 11/19/09

Today, the House Financial Services Committee (who should be busy with more important things) passed the "Too Big To Fail" amendment. Also known as the Kanjorski amendment, named for the Pennsylvania Congressman who authored it.

This awesome amendment (sarcasm) gives Congress the power to decide what constitutes "too big to fail"--decide what companies are "too big to fail"-- the power to take over those companies and dismantle them as they see fit.

A summary from the Committee press release:

 

• Objective Standards. Size is by no means the only factor to determine if a financial company is "too big to fail." The recent financial crisis has shown that many other factors can also cause a company to become a systemic risk. Rather, the amendment considers a variety of objective standards to determine if financial firms pose a threat to our financial stability, including the scope, scale, exposure, leverage, interconnectedness of financial activities, as well as size of the financial company. The Kanjorski amendment does not cap the size of financial institutions.
• Mitigatory Actions. If a financial company is deemed systemically risky, the Kanjorski amendment provides responsible preventative actions to protect our financial system and curtail those risks. These include modifying existing prudential standards, imposing conditions on or terminating activities, limiting mergers and acquisitions, and in the most extreme cases, breaking up the company.
• Protects American Competitiveness. We have learned from this financial crisis that we are all connected. The Kanjorski amendment addresses the concern that our regulatory system works in conjunction with those around the globe. Currently, the European Union is considering similar action, and harmonized regulations would benefit both economies.

Anyone else see the problems that may arise from granting the wankstas (sic) in Congress this much control over enterprise?

If you are as troubled as I am by the prospect of members of Congress having this sort of authority, please let the members of the committee know.

Posted 11/19/09 isuuofi Madison, WI

I think that the government is too big to fail, so perhaps we should start to dismantle it before it causes any more trouble.

Posted 11/19/09 TonyM Depew, NY

And this is going to be in the regulations package with 1207? Ron would normally vote NO to the whole package because of this, I would believe.

Posted 11/19/09 Kyle Lexington, TN

Actually, I think this law makes complete sense. Since we have already (self-evidently) granted Congress to create these financial leviathans through the corporate/welfare state, we might as well give them the power to disassemble them. Of course, it would be preferable to return to free market capitalism, but that seems unlikely.

Posted 11/19/09 ricquejon hatfield, PA

I once remember doing a service call in Kanjorski's district. This guy has stuff all over the place named after him. He is just "full of himself".

Posted 11/20/09 illuminati hater Las Vegas, NV

I love how they say, "promote competitiveness." Last I checked, bailing out a company, and taking it over was cheating. When a company fails, it's a sign that another company was serving the consumer--the main tool in giving a business productivity--in a fashion that better fit their needs. I don't understand what the government is afraid of when it comes to the markets. They're simple, smart, and organic. Everything good from the failed company (stocks, people, etc.) will be easily moved to something better. Why is that so hard to understand?

Posted 11/20/09 Paul S. Brighton, MI

At a park near Big Sur I took a walk up the ravine. Redwoods are amazing. Yet even they are not to big to fail. Seeing the huge hulks mouldering in the leaf litter was memorable. New seedlings were already competing for the vacant space created.

Posted by Gary Howard on 11/19/09
Last updated 11/19/09

Today, AP is reporting the news of a judge's decision against the Army Corps of Engineers in a case assessing its culpability in the destruction that followed Hurricane Katrina in 2005. I will make my disclaimer here, I am a native of New Orleans just one year removed from my hometown when the storm hit.  I saw my family and everyone I knew displaced and affected by the disaster, and I knew just like everyone else who lived there that it was the government's fault. A man-made disaster.

Late Wednesday, U.S. District Judge Stanwood Duval sided with six residents and one business who argued the Army Corps' shoddy oversight of the Mississippi River-Gulf Outlet led to catastrophic flooding after Hurricane Katrina.

To call what happened in New Orleans an example of a massive government failure is actually just the beginning. What happened there is what happens when increased government and the subsequent political corruption goes unchecked and un-policed. There have been many jokes made about the level of corruption in Louisiana (it goes way back), the type of corruption that spread so wide it led to lapses in the most basic protections for its citizens. However, this was much more of a federal government disaster.

The ruling is also emotionally resonant for south Louisiana. Many in New Orleans have argued that Katrina, which struck the region Aug. 29, 2005, was a manmade disaster caused by the Army Corps' failure to maintain the levee system protecting the city.

In his 156-page ruling, Duval said he was "utterly convinced" that the corps' failure to shore up the channel "doomed the channel to grow to two to three times its design width" and that "created a more forceful frontal wave attack on the levee" that protected St. Bernard and the Lower 9th Ward.

"The Corps had an opportunity to take a myriad of actions to alleviate this deterioration or rehabilitate this deterioration and failed to do so," Duval said. "Clearly the expression 'talk is cheap' applies here."

The point here, without going on any longer about my home state's dysfunctions(it could fill books- don't forget Huey Long), is that the government sanctioned overseer of the one thing they needed to keep on top of, did not do its job. Why?-Because there was no accountability. One hopes this lawsuit brings about some positives, but probably not. The government will never take full accountability for its disasters, because bureaucrats believe that they are "serving the public" or something like that. WHich is why we should not trust them or give them the power to do things we can do our selves (or at least hire someone more competent to do for us).

Posted 11/19/09 007brendan San Rafael, CA

Yeah, it's not like New Orleans is below the Mississippi River water line and is built in a flood plain or anything. Clearly, the destructive force of nature is all the government's fault. I normally agree that government is the problem. But your solution in this case is... more government; more nanny state. "Why didn't you protect me from nature?!" Whatever comes from this case, your arguments aren't supporting more limited government.

Posted 11/19/09 Gary Howard Arlington, VA

007brendan, You must have not comprehended my post clearly. Actually, my arguments are supporting limited government--hence I pointed out the failure of government to prove my case that government is NOT the solution. Please read carefully.

Posted 11/19/09 ateal Sharpsburg, GA

I think brendan is trying to say that you can't really blame the government for a hurricane, or for building a city under sea level in a hurricane zone. I understand that you are saying the government's incompetence made it worse, and that is probably true, but it is false to claim that the government "caused" it. Or, as the brilliant Kanye West claimed, "George Bush doesn't like black people." On another noe, they should have just left it there after Katrina instead of rebuilding it. It is inevitably going to happen again.

Posted 11/19/09 ateal Sharpsburg, GA

I think brendan is trying to say that you can't really blame the government for a hurricane, or for building a city under sea level in a hurricane zone. I understand that you are saying the government's incompetence made it worse, and that is probably true, but it is false to claim that the government "caused" it. Or, as the brilliant Kanye West claimed, "George Bush doesn't like black people." On another noe, they should have just left it there after Katrina instead of rebuilding it. It is inevitably going to happen again.

Posted 11/20/09 Gary Howard Arlington, VA

ateal, Please point to where I say "government caused the hurricane." I don't. I simply state that the government failed to do what it claimed it was necessary for, and that we should never trust them to do so. Many major cities are built in places with potential natural dangers, that point is moot. California will inevitably suffer earthquakes, just as Japan will, and blizzards will lock in many northern cities, and parts of Georgia will experience flooding inevitably...what's your point. My point is, as stated above, government fails almost always.

Posted 11/20/09 Gary Howard Arlington, VA

ateal, Please point to where I say "government caused the hurricane." I don't. I simply state that the government failed to do what it claimed it was necessary for, and that we should never trust them to do so. Many major cities are built in places with potential natural dangers, that point is moot. California will inevitably suffer earthquakes, just as Japan will, and blizzards will lock in many northern cities, and parts of Georgia will experience flooding inevitably...what's your point. My point is, as stated above, government fails almost always.

Posted 11/20/09 Gary Howard Arlington, VA

ateal, Please point to where I say "government caused the hurricane." I don't. I simply state that the government failed to do what it claimed it was necessary for, and that we should never trust them to do so. Many major cities are built in places with potential natural dangers, that point is moot. California will inevitably suffer earthquakes, just as Japan will, and blizzards will lock in many northern cities, and parts of Georgia will experience flooding inevitably...what's your point. My point is, as stated above, government fails almost always.

Posted by Gary Howard on 11/11/09
Last updated 11/12/09

In today's New York Times, reason enough for increased scrutiny of the Federal Reserve's practices is illustrated. 

In response to growing public and congressional support for H.R. 1207, Fed Chairman Ben Bernanke did what the Fed seems to do so well-- operate in secret to manipulate outcomes.

Fed officials say they were alarmed, but focused on making their case in private rather than in public. Mr. Bernanke met privately with dozens of House and Senate members, even taking calls at home on weekends, and won praise for his willingness to listen and answer their questions.

Bernanke comes off as an elitist who is simply apoplectic in reaction to the prospect of the Federal Reserve having to actually answer to the people whose money it deals and degrades on a daily basis. So he smartly stopped defending the Fed in public, and began working the system as usual:

Last summer, the central bank hired an experienced Democratic hand and former lobbyist, Linda Robertson, to help deal with members of Congress. Mr. Bernanke alone has met privately with about 40 senators and many House members in the last few months, sometimes to dissect arcane policy issues and sometimes just to explain what he does in plain English.

To re-translate in plain-er English: Bernanke hired a former Enron lobbyist to grease the wheels in Congress so that Americans can continue to be screwed by an unbeholden, unaccountable,unelected central bank.

The problem is, Bernanke still has not made a plausible case against a Fed audit. He and the other Fed supporters go on about nightmare scenarios where an audit:

"...could lead to a Congressional "takeover" of monetary policy that would be "highly destructive to the stability of the financial system, the dollar and our national economic situation."

Hold on, isn't that what has already happened--with the Fed at the helm! I don't believe you Mr. Bernanke, but maybe I am not as sophisticated as your little club that has secret meetings, maybe I am not privy to the same information that you are. Audit The Fed-now.

Posted 11/11/09 BruceKoerber Cedar Rapids, IA

http://moneyandethics.blogspot.com/ Wednesday, November 11, 2009 Who's The Federal Reserve Trying to Bribe Now? Not only does the FED hide the information about to whom they have given the 'hot off the press' money, but likewise they are not saying which House members and which Senators that Bernanke is meeting in private with 'to persuade.' The Nobel Prize Committee members discreetly found places to hide the money they received to elect Paul Krugman in 2008 but no one knew that the FED met secretly with them. If the public knows which elected representatives the FED is trying to bribe then maybe it will be too politically dangerous for these politicians to accept the bribe. An unbribed politician may then vote according to the demands of his (her) constituency. Transparency regarding who it is that the FED is meeting with and trying to bribe is almost as important as an audit.

Posted 11/11/09 JohnF Lake Mary, FL

"...could lead to a Congressional "takeover" of monetary policy that would be 'highly destructive to the stability of the financial system, the dollar and our national economic situation.'" Strictly speaking here, the Fed is right. What the Fed creates are ostensibly bank notes, and Congress doesn't have Constitutional authority to regulate them. Giving Congress the power to print fiat currency would be a disaster worse than letting the Fed do it. If Congress wanted to takeover monetary policy, all it would have to do is abolish the Fed and legal tender laws. It's really a non-issue here though. It's a lie that this would happen because of 1207. The bill doesn't give Congress any power over monetary policy whatsoever. My earnest hope is that this discussion will lead to more people questioning why we must be forced to use a legal tender bank note with no direct ties to anything of value.

Posted 11/12/09 larry101 New York, NY

"To re-translate in plain-er English: Bernanke hired a former Enron lobbyist to grease the wheels in Congress so that Americans can continued to be screwed by an unbeholden, unaccountable,unelected central bank." Now who's being the elitist? If this bill turns into a Congressional takeover of the Fed, the Greenspan days will look like the golden years. Since when did Congress just stop with an 'audit'? They have there hands in healthcare, telecommunications, farming, etc... The irony is if you take a little time, read the Feds financials, pay attention to the market, and use a little common sense, you can do your own audit of the Fed.

Posted 11/12/09 totalrockage Austin, TX

"Since when did Congress just stop with an 'audit'?" I think that's precisely the hope Mr. Paul has for this bill. People may start scrutinizing heavily the Federal Reserve, which is a good thing. The issue really, as I think @larry101 is alluding to, is that Congress won't *abolish* the Federal Reserve, it will *become* (in essence) the Federal Reserve. I wonder if Mr. Paul is in the position to prevent this. However, then we come down to which of the two (the closed-door Fed, or financially irresponsible Congress) is better to control the money supply if it goes the wrong way.

Posted 11/12/09 Gary Howard Arlington, VA

larry101 and totalrockage, When it comes down to it, even if they are fiscally irresponsible, at least Congress is accountable to voters via the ballot box. The Fed is not, and that is the point. Transparency and accountability. If Congress doesn't meet our expectations, we can vote them out. The Fed answers to no one.

Posted 11/12/09 totalrockage Austin, TX

Gary, Yeah, that's really what I was thinking. Even if the power is illegal (in regard to the Constitution), at least they're accountable.

Posted 11/14/09 Glenn Cumming, GA

So, BerBumbler depends on secret meetings with politicians to protect Fed independence. I knew there was a reason I stopped reading the NYT. This article is filled with so much doubletalk I get nausea. I have watched BerHanke give testimony to Congress declaring that the Fed had no responsibility for the value of the dollar nor were long-term interest rates part of its forecasting. Basically, the Fed manipulates the money supply(monetary policy) without regard for the value of the dollar(please define Congress) or long-term distortions in the capital structure. The Federal Reserve System is as anti-liberty as you can get.