The Fed’s New Bailout Rule Expands Its Powers Rather than Limiting Them
By Pam Martens and Russ Martens
December 1, 2015
Fed Chair Janet Yellen Takes Her Seat at an Open Meeting of the Federal Reserve Board of Governors on November 30, 2015 to Vote on a New Bailout Rule
Yesterday, the Federal Reserve Board of Governors voted 5-0 to approve a new rule that was required under the 2010 Dodd-Frank financial reform legislation to rein in the type of vast, secret, and below-market-rate lending the Fed engaged in during the 2007 to 2010 financial crisis.
But rather than rein in its hubris, the Fed seems to have gone out of its way to emphasize that it has the power to make loans to “persons,” not just financial firms whose illiquidity might pose a threat to the nation’s overall financial stability.
Most Americans understand that the U.S. is experiencing unprecedented wealth inequality and that there are many billionaires in the U.S. whose net worth exceeds that of many regional banks (think Koch brothers or the Walton family behind Walmart). But if individual “persons” should get in a financial bind, is it really the job of the Federal Reserve to put taxpayers at risk with emergency bailouts?
We seem to have devolved from a central bank whose job it was to set monetary policy to a central bank with added supervisory oversight of Wall Street banks, vast emergency lending powers, a whopping balance sheet of its own of over $4 trillion and now it’s adding carefully crafted language to its rules that make it perfectly legal for the Fed to make loans with no set dollar limits to “persons.”
The summary of the new rule that the Fed placed in the Federal Register repeatedly makes reference to its ability to lend to persons. For example, one section reads:
Quote:
“Third, the final rule provides that a program or facility would not be considered broad-based if fewer than five persons are eligible to participate in the program or facility. In this context, eligibility would be determined by qualification under all the terms and conditions established for participation in the program or facility.” [Italics added.]
Footnote 11 adds even more bizarre language from the Fed:
Read more @ http://wallstreetonparade.com/2015/12/the-fed...ting-them/
By Pam Martens and Russ Martens
December 1, 2015
Fed Chair Janet Yellen Takes Her Seat at an Open Meeting of the Federal Reserve Board of Governors on November 30, 2015 to Vote on a New Bailout Rule
Yesterday, the Federal Reserve Board of Governors voted 5-0 to approve a new rule that was required under the 2010 Dodd-Frank financial reform legislation to rein in the type of vast, secret, and below-market-rate lending the Fed engaged in during the 2007 to 2010 financial crisis.
But rather than rein in its hubris, the Fed seems to have gone out of its way to emphasize that it has the power to make loans to “persons,” not just financial firms whose illiquidity might pose a threat to the nation’s overall financial stability.
Most Americans understand that the U.S. is experiencing unprecedented wealth inequality and that there are many billionaires in the U.S. whose net worth exceeds that of many regional banks (think Koch brothers or the Walton family behind Walmart). But if individual “persons” should get in a financial bind, is it really the job of the Federal Reserve to put taxpayers at risk with emergency bailouts?
We seem to have devolved from a central bank whose job it was to set monetary policy to a central bank with added supervisory oversight of Wall Street banks, vast emergency lending powers, a whopping balance sheet of its own of over $4 trillion and now it’s adding carefully crafted language to its rules that make it perfectly legal for the Fed to make loans with no set dollar limits to “persons.”
The summary of the new rule that the Fed placed in the Federal Register repeatedly makes reference to its ability to lend to persons. For example, one section reads:
Quote:
“Third, the final rule provides that a program or facility would not be considered broad-based if fewer than five persons are eligible to participate in the program or facility. In this context, eligibility would be determined by qualification under all the terms and conditions established for participation in the program or facility.” [Italics added.]
Footnote 11 adds even more bizarre language from the Fed:
Read more @ http://wallstreetonparade.com/2015/12/the-fed...ting-them/
