Spitzer has some great questions for the Fed

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strabes's picture
strabes
Status: Diamond Member (Offline)
Joined: Feb 7 2009
Posts: 1032
Spitzer has some great questions for the Fed

 The questions Spitzer asks in this article are crucial:  

http://www.slate.com/id/2221898/

Just a generic call for auditing like Ron Paul is doing can be spun by media to mean nothing...auditing the number of pencils each Fed office has could be called the "2009 Omnibus Fed Auditing Act" and nobody would be the wiser.  Spitzer keeps this discussion on specifics.  This type of meat must be included in any audit process.  Your congressmen need to be pressured about this rather than allowing them to get away with passing a well-named bill that does nothing.

I'm fairly confident this perspective is what got Spitzer "caught" so he could be run out of office.  Most politicians have mistresses, whores, whatever.  Why would the most powerful governor in terms of jurisdiction over Wall St and the NY Fed be the only politician in years to be run from office for that?   

questions from the article wrote:

 

Where is the legal analysis showing the Fed had no power or insufficient power to intervene to save Lehman Bros.—widely viewed as the failure that precipitated the credit crisis—as it has claimed repeatedly, yet had sufficient power to orchestrate the gift of Bear Stearns assets to JPMorgan Chase? How did it differentiate between the two?

What analysis had the Fed done of the potential impact of derivatives trading over the five years preceding the meltdown as derivatives trading grew exponentially? Was there any effort made to assess the overall risk facing the banks the Fed was supposed to oversee?

Did the Fed do any analysis of the risk that would result from AIG's potential default, and how did the Fed analyze the risk to each of AIG's counterparties?

When the Fed authorized the first $80 billion payment to AIG, almost all of which flowed directly through to counterparties, why did the Fed not arrange for taxpayers to get equity in the counterparties, rather than the essentially worthless AIG equity? What communications did the Fed have with the counterparties over this period?

When did the Fed ask the banks it is responsible for overseeing how they evaluated the potential risk of expanded derivatives trading and how these banks assessed the stability of their counterparties?

What analysis had the Fed done of the general leverage ratios in the financial-services sector and the need for additional capitalization? Had it done any "stress tests" during this period, or did it believe that there would never be an economic downturn?

And a few questions related to the Fed's governance:

Is the N.Y. Fed willing to release minutes and attendance records of the past five years, even if redacted to avoid company-specific information? How can the public be assured that this powerful institution is focusing on the right issues?

Since the N.Y. Fed is controlled by the very institutions that were at the heart of the meltdown, and these institutions used the Fed to give themselves hundreds of billions of taxpayer dollars to resuscitate their balance sheets without any public scrutiny, will the Fed release any conflict-of-interest rules it has in place to assure the public that board members do not act on policies that will affect their own corporate interests?

Six of the nine members of the N.Y. Fed board are supposed to be "public" representatives, yet these individuals have all too often been CEOs of major corporations or financial entities. How does the Fed define "public" board members, and what is the process by which those board members are selected?

And some questions about its prospective functions:

The Fed itself states that "the safety, soundness and vitality of our economic system" is its responsibility. How exactly are these terms measured? By GDP growth? Bank profits? Job growth? Growth of median household income? Without knowing how it will measure success, how can we measure whether the Fed is succeeding or failing?

How does the Fed believe it can regulate "systemic risk" meaningfully if institutions remain "too big to fail," necessitating that the federal government be an insurer of their risk in any serious downturn?

How does the Fed plan to limit the interconnectedness of the major institutions to prevent the risk of dominos falling sequentially?

Has any thought been given to refocusing on a financial services model that has more smaller institutions and fewer mega banks, thus diversifying risk?

 

strabes's picture
strabes
Status: Diamond Member (Offline)
Joined: Feb 7 2009
Posts: 1032
Re: Spitzer has some great questions for the Fed

 and fyi, the article written in May which is linked in the above article is probably even more important...

http://www.slate.com/id/2217811/

Spitzer has been on a rampage since being dethroned.  I hope he gets some sort of attention, but we'll never see anything about this in the mass media.  If Spitzer ever gets back in the mass media it will be about his mistress because she's way hotter than Geithner.  :)

MarkM's picture
MarkM
Status: Platinum Member (Offline)
Joined: Jul 22 2008
Posts: 837
Re: Spitzer has some great questions for the Fed

You see what happens to people like Spitzer.  Nah, he's probably the only one seeing a call girl, and we must rid the hallowed halls of the state of such vermin.

DrKrbyLuv's picture
DrKrbyLuv
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 1995
Re: Spitzer has some great questions for the Fed

Nice dig and analysis strabes.  Spitzer has been doing a good job in trying to make the Fed accountable which more often than not is political suicide.  The propaganda machine (MSM) is an accomplice to the Fed and they demonize as directed.

I really enjoyed Spitzer's article as it is directly on the mark.  It is bizarre that the Fed is requesting more power while clearly they have been shown to be incompetent and dishonest regulators. 

Larry

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