Maybe I need to have a Ph.D in economics in order to understand just why the Federal Reserve Bank should not be subject to a complete and thorough audit.
There is some real nail biting going on in Washington D.C. right now about the effort in the Senate to include language in the financial reform legislation they are debating that will require the critical parts of the Fed not currently audited to be examined, with the information to be released after six months.
My president has been on a roll lately, one I think he and his administration well deserve for the planning and politicking that they have engaged in over the last eighteen months behind the push for healthcare reform. But President Obama is about to come to one of those moments in his tenure, if he vetoes any bill requiring a complete Fed audit, that is going to make all Americans, including some of his staunchest supporters, remember why they hate politicians so much.
It is the kind of thing that would almost – I said ALMOST – make me want to be a Tea Bagger myself…
…except for the fact that you have heard not one word about this from them about this.
All of a sudden, they are concerned about those within their ranks who may be racist, as if one of the most momentous events in the history of American politics isn’t brewing before their very eyes. Finally, these misguided souls have a chance to take a break from the non-productive tirades of Malkin/Beck/Hannity, put their shoulders to the grindstone for a few weeks, and actually win one for the people by lending a hand to the effort to open up all of the Fed’s books. But just as I thought, whenever it comes to something other than hating their black president, they lose focus.
The flood in Nashville will have nothing on the tsunami of lobbyist cash that is hitting D.C. as we speak. Wall Street has absolutely no interest in the average citizen being able to see what real affirmative action looks like. They have absolutely no interest in the average citizen being able to see the connection between worthless assets being purchased at above market rates and the fat bonuses that can be generated when you have jerry-rigged balance sheets anchored by the proceeds from these very same sham sales.
Because despite all the attention and fervor that was placed on Goldman Sachs and their alleged lawbreaking, we are overlooking the kingpin of the whole operation- the Fed. Lambasting Goldman Sachs in front of TV cameras for a couple of days is the equivalent of rousting the small time drug dealers who sell their wares on the street. Until you are willing to go after the kingpin, there will always be small-time dealers on the street, slinging fake securities the way drug dealers sling watered down dope.
The president can’t go for any audit, not if he wants to be re-elected. Sad – this is really sad, but true. But what if we held Obama as a political hostage and made the White House sweat as the entire country mobilized to support a full and complete audit of the Fed? I mean, it really wouldn’t be that much different than the type of political ploy that the Obama administration thought it was using when it proposed opening up offshore drilling.
And it might make him more amenable to a compromise that would let us see the ALL the books after a five year blackout period – the six months being proposed is too short, and the declassified information guidelines are too long - which would mean that the release of the information wouldn’t harm any president’s re-election bid because it is longer than a four year term, and it wouldn’t roil markets too much because of the age of the information when it is disclosed. A five year blackout period also means there is absolutely no danger of affecting monetary policy, or ratcheting up the politics inherent in the Fed's day-to-day management than there already is.
What it would do, though, is keep the Fed chairman’s feet to the fire, and make Wall Street more mindful of its actions, because the disclosures would be recent enough to be used as evidence in lawsuits against investment banks who handed out unearned bonuses, the kind of lawsuits that would have multi-billion dollar damage claims if they were filed.
Big banks, small banks – it doesn’t matter what size they are if they can rely on the implicit support of the Fed, who uses the full faith and credit of America as collateral whenever it feels like it to back the gargantuan loans it makes to the financial sector. I mean, if the Fed were backed by Bermuda, or the Cayman Islands, where a lot of these banks claim they operate many of their subsidiaries, do you think it would have the same clout?
Where else in America can you destroy so much of your public company and still get paid the big bucks? Or demand “retention bonuses” because we need the same expertise you used to screw the business up more than ever?
The bigger moral issue for the average American is not whether the Fed will have the power to prevent a run on banks, or keep enough liquidity in the markets so that our 401(k) statements don’t scare us to death when we open them, but WHY the same guys at the top who screwed things up get to take home billions in profits and bonuses when we all know damn well they are the ones who were on duty when their banks erased every dollar of equity from their balance sheets?
And for those who worship at the altar of bipartisanship, this is it - the only time you are going to see both major political parties working together in the near future.