Color me surprised - the FED playing games with our money

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From the Christian Science Monitor:
Fed in hot water over secret bailouts
The Fed 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.

This raises three issues.

First, only Congress is supposed to risk taxpayer dollars. The Fed is not part of the legislative branch. Its secret deals, announced almost two years after they were done, violate the democratic process, if not the Constitution itself. 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. The Fed has just proven Jefferson�s point.
The other two points are even more serious than this one. There are people suggesting that we audit the FED -- I am thinking that this is a wonderful idea; their power has accreted gradually over time to the point where they are not acting in the best interests of we the general taxpayer. The FED is now in the pockets of the major financial movers and this needs to be separated.

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This page contains a single entry by DaveH published on April 3, 2010 7:07 PM.

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