Monday, November 28, 2011

Banks Profited From Secret Fed Loans

Secret loans from the Federal Reserve allowed risk-free profits by the bankers. The bank bosses took over-sized bonuses for their success at turning risk-free money into profits.

Ron Paul is right, we need a full and complete audit of the Federal Reserve.

Secret Fed Loans Helped Banks Net $13 Billion
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy.
“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

Thursday, November 10, 2011

One Of The Few Sane Voices

Think about losing 98% of your wealth. Or having 98% of your wealth stolen by the banksters.  Now consider the following.

Ron Paul is called one of the few sane voices:
One of the few sane voices for many years regarding the dangers of excessive private and public debt has been Presidential candidate Ron Paul.

Gold Could Go to ‘Infinity’ Says Presidential Candidate Ron Paul
Ron Paul gave another perceptive interview to CNBC yesterday and warned of hyperinflation and the possibility that the dollar could become worthless.
When asked how high the gold price would go and why, he responded:
“Well, the question is how much lower is the dollar going to go in purchasing power? And I said to infinity unless we change our ways. Because if you look at the gold/dollar in 1913 when the fed started, we've lost about 98% of its value.“

Wednesday, November 9, 2011

Government Regulation Failed

Government financial regulation seems strict, and it effectively limits competitors. The politically well-connected receive regulation waivers, then proceed to bankrupt their companies and steal from their clients.

FINRA Gave Corzine Waiver to Run MF Global
When Jon Corzine returned to the securities business to run MF Global, he did so without requalifying or registering, as required by FINRA. Apparently FINRA waived the requirements for the former New Jersey governor, who resigned from the now-bankrupt MF Global last week.

According to a story in Forbes, a search on FINRA’s BrokerCheck failed to turn up the former head of Goldman Sachs ...

FINRA is generally insistent on the need for registration ...

Government Backstops

Nassim Nicholas Taleb authored the article End Bonuses for Bankers.

While Mr. Taleb adequately describes some of the symptoms of the current banking problems, his suggestion of ending bonuses radically departs from a workable solution.

Mr. Taleb's proposal:
Any person who works for a company that, regardless of its current financial health, would require a taxpayer-financed bailout if it failed should not get a bonus, ever.

He continues:
The asymmetric nature of the bonus (an incentive for success without a corresponding disincentive for failure) causes hidden risks to accumulate in the financial system and become a catalyst for disaster.

If risk of failure is completely put on the owners and investors, the owners and investors will create adequate risk management systems or they will quickly fail. The problem occurs when the costs of failure are taken by the government. Remove the government backstops and insurance, and there will be no need for limiting free market bonuses.

Tuesday, November 8, 2011

GAO and the Federal Reserve

Ron Paul has been calling for a full and complete audit of the Federal Reserve. Ron Paul's bill H.R. 459, to allow the GAO to conduct a full audit, has 191 co-sponsors.

Barron's reports that a recent limited review by the GAO found conflict of interest and self-dealing at the Federal Reserve:
The history of this cozy arrangement between the regulators and the regulated is outlined in a 266-page, July 2011 audit by the Government Accountability Office that came to light during an Oct. 4 hearing by the House Subcommittee on Domestic Monetary Policy and Technology, which is chaired by Texas Republican Rep. Ron Paul. The story is also contained in a companion 127-page GAO audit, released Oct. 19, attacking the Fed's inadequate safeguards against potential conflicts of interest among board members at its regional banks. Both reports are one-time audits required by the Dodd-Frank Wall Street reform law.

Where there is smoke there is fire, and where there is one cockroach there are many more. When the Government Accountability Office is allowed to do a full and complete audit of the Federal Reserve, there will be fire and cockroaches.