By FITSNews || When it comes to picking winners and losers in the marketplace, no government agency has quite the reach of the U.S. Federal Reserve – which has doled out trillions of dollars over the last three years in the name of “economic recovery.”
Yet what makes the Fed’s influence so frightening isn’t just the money it has placed us (and our grandchildren) on the hook for – it’s the iron curtain of secrecy behind which this “quasi-governmental” entity continues to make decisions with all that money. Last week, under Congressional pressure, that curtain lifted ever so slightly as the New York Federal Reserve finally released some of the details behind its Bear Stearns and AIG bailouts (which of course occurred before the larger “Bush bailout”).
Former U.S. Secretary of Labor Robert Reich had this to say about the revelations:
The Federal Reserve has finally came clean. It now admits it bailed out Bear Stearns – taking on tens of billions of dollars of the bank’s bad loans – in order to smooth Bear Stearns’ takeover by JPMorgan Chase. The secret Fed bailout came months before Congress authorized the government to spend up to $700 billion of taxpayer dollars bailing out the banks, even months before Lehman Brothers collapsed. The Fed also took on billions of dollars worth of AIG securities, also before the official government-sanctioned bailout.
The losses from those deals still total tens of billions, and taxpayers are ultimately on the hook. But the public never knew. There was no congressional oversight. It was all done behind closed doors. And the New York Fed – then run by Tim Geithner – was very much in the center of the action …
… the Fed has a big problem. It acts in secret. That makes it an odd duck in a democracy. As long as it’s merely setting interest rates, its secrecy and political independence can be justified. But once it departs from that role and begins putting billions of dollars of taxpayer money at risk — choosing winners and losers in the capitalist system — its legitimacy is questionable.
Reich then proceeds to do something few of America’s “opinion leaders” even think about doing these days … he consults our nation’s founding wisdom in commenting on public policy.
“Thomas Jefferson put a stop to Alexander Hamilton’s idea of a powerful central bank out of fear it would be unaccountable to the public,” Reich writes. “The Fed has just proven Jefferson’s point.”
Indeed it has.
U.S. Sen. Jim DeMint has been among those leading the fight to open the doors of this secretive agency, although his efforts have been rebuffed. In fact, Senate leaders refused to even permit a vote on DeMint’s bill requiring the Fed to submit to a public audit. Meanwhile, the Fed continues to decide on its own what the American taxpayers should know about how their money is being spent – while paying lip service to transparency.
“The Federal Reserve recognizes the importance of transparency to its financial stability efforts and will continue to review disclosure practices with the goal of making additional information publicly available when possible,” the agency said in a statement.
Yeah … we won’t hold our breath – and neither should you.
A few market analysts say that the billions of dollars in toxic assets that taxpayers took off the books of Bear and AIG will ultimately wind up being good investments.
That’s not the point …
The point is that government shouldn’t be in the speculative business to begin with … whether the doors to that process are open or closed.
By Rufus April 5, 2010 at 8:55 am
The Federal Reserve is the most powerful group in the world and they are unelected and held accountable by no one. The majority of Senate members do not want them to be audited. Senator Demint is to be commended for doing his job for us . Too bad there are not more Senators around who value democracy and work for the people.