Obama wants Fed to be finance supercop

[SpartanDem]

Source: AP

WASHINGTON (AP) — The White House told industry officials on Friday that it is leaning toward recommending that the Federal Reserve become the supercop for "too big to fail" companies capable of causing another financial meltdown.

According to officials who attended a private one-hour meeting between President Barack Obama's economic advisers and representatives from about a dozen banks, hedge funds and other financial groups, the administration made it clear it was not inclined to divide the job among various regulators as has been suggested by industry and some federal regulators.

"The idea of having a council of regulators was pretty much vetoed," said one participant.

Treasury Secretary Timothy Geithner, who briefly attended the meeting but did not identify the Fed specifically as his top choice, told the group that one organization needs to be held responsible for monitoring systemwide risk. He said such a regulator should be given better visibility into all institutions that pose a risk to the financial system, regardless of what business they are in.



The administration officials said a legislative proposal would likely be sent to Capitol Hill in June with the expectation that the House Financial Services Committee, led by Rep. Barney Frank, D-Mass., would consider the measure before the July 4th recess.



Read more: http://www.google.com/hostednews/ap/article/ALeqM5jKxr0o-1pBnyCaoz657VTRhmN0igD982BOCO0

[Psychic Consortium]

1. Obama kills two birds with one stone. Very good. nt

[InkAddict]

7. I'm mixed on this one...

We already have entities "too big to fail." Won't this sort of take it down a notch to "persons too big to prosecute" (a past/current member of the supercop team, a president, a Congress critter, a CEO? I see an Oceans #.... reality show in the making. It sounds a little like Timmy's looking to elevate his friends' status to "immune" by reason of cophood.

Nevertheless, it's clear that the SEC failed to investigate anything or notify anyone of intel it received about out-of-control Ponzi persons/corps. As for the FED and the recent geniuses there suddenly being deputized...I donno?????????

[Psychic Consortium]

32. An excuse to transform the Fed from a rogue corrupt institution

into one that actually works under some supervision and for the American people.

[shadowknows69]

2. I thought that the Fed was basically the big shadowy master of all our money anyway?

I admit economics is not my forte but I thought the Federal Reserve was kind of a bad guy in this whole mess.

[madrchsod]

3. it`s the fox guarding the hen house

change we can believe in......

[snowdays]

8. ANOTHER C ZAR. !!!

[Baby Snooks]

18. Exactly...

And then when some of the hens turn up missing the fox merely tells the farmer he miscounted the number of hens.

[Dyedinthewoolliberal]

4. This is the check and balance system

from my perspective. This is regulatory behavior on the part of government to protect the populace from rampant capitalism..... :shrug:

[aquart]

29. How about preventing "too big to fail" period?

Why are we allowing mega companies to exist in the first place? Aren't they anti-competitive? Which makes them anti-free market?

[LuvNewcastle]

5. The "too big to fail" companies

need to be split up.

[RC]

21. Too big to fail = Too big to manage.

[dipsydoodle]

6. Sounds more like

out of the frying pan into the fire to me.

THE FEDERAL RESERVE SYSTEM:A FATAL PARASITE ON THE AMERICAN BODY POLITIC
http://home.hiwaay.net/~becraft/VieiraMono4.htm

[w4rma]

9. How about an entity other than the privately owned Federal Reserve? (nt)

[tocqueville]

10. Federal Reserve in new role...

[Triana]

11. Uh-huh. And the Fed consists of who? Members and former members...

...of those 'too big to fail' companies that they are supposed to be "policing"?

In other words - Wall Street and "Too Big to Fail" companies - are "policing" THEMSELVES.

We know how THAT will turn out.

What this REALLY means and what Obama and no politician and certain not Mr. Wall St. Himself, Timothy Geithner - is that the US Federal Treasury's primary job - it's reason for existence, shall henceforth be to shield Wall Street and "Too Big to Fail" companies from any laws, regulations, or from any needs or demands of the general populace and from any thing that would threaten its/their ability to make PROFIT - regardless the mechanisms or consequences of their doing so.

THAT is what this means. If they bring down the world economy. Oh. That's OK. Big Daddy will fix it. WITH OUR MONEY.

This is a BIGGER version of: "privatize the profit - socialize the risks" - THAT is what it is.

[Ozymanithrax]

12. That is like putting Al Capone in charge of regulating crime.

Regulatiors should be free as possible from those they regulate.

This will not work.

[meow2u3]

17. John Kerry said it best in 2004

It's like trusting Tony Soprano with matters of law and order.

[krispos42]

13. Break the fucking companies up

Then they aren't "too big to fail", and market capitalism can take care of the weak, stupid, or unlucky banks.


Dr. Ravi Batra outlined this pretty clearly in "The Myth of Free Trade". Competition in a business market serves the customer, not the businesses in that market. This is why businesses tend to merge into giant corporations as quickly as possible, the natural extension of captitalism. It's up to the government to keep them from merging in harmful ways.

We have anti-trust laws... USE THEM!

[Baby Snooks]

19. Anti-trust laws?

Those were tossed out in the 1990s by Phil Gramm and a certain president. With a stroke of a pen, Wall Street became Las Vegas.

I often refer to Wall Street at Las Vegas. Las Vegas at this point is more regulated than Wall Street is.

[judesedit]

14. FINALLY...CONTOLLING THESE GREEDY BASTARDS IS LONG OVERDUE

Of course the GOP and their friends in banking are going to fight this all the way. They can't fathom the thought of having to earn an honest living. They keep trying to cover up the fact that the situation got to this point under their watch. Obviously they are unable to control their greed, their spending, and avoid their responsibility to the American people at all costs. Well, they've finally been given their punishment. Hallelujah!!!

[aquart]

30. Yeah. Set a fox to guard a fox?

I'm thinking, NO.

[JDPriestly]

15. The Fed Board. Can we trust them?

The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate. A full term is fourteen years. One term begins every two years, on February 1 of even-numbered years. A member who serves a full term may not be reappointed. A member who completes an unexpired portion of a term may be reappointed. All terms end on their statutory date regardless of the date on which the member is sworn into office.

The Chairman and the Vice Chairman of the Board are named by the President from among the members and are confirmed by the Senate. They serve a term of four years. A member's term on the Board is not affected by his or her status as Chairman or Vice Chairman.

http://www.federalreserve.gov/aboutthefed/bios/board/default.htm

Current members are Ben S. Bernanke, Chairman, Donald L. Kohn, Vice Chairman, Kevin M. Warsh, Elizabeth A. Duke, Daniel K. Tarullo

Ben Bernanke

Bernanke was educated at East Elementary, J. V. Martin Junior High, and Dillon High School, where he was class valedictorian. At age 11, Bernanke won the state spelling bee competition but finished 26th overall at the national competition in Washington, tripping up on the word “edelweiss.” Bernanke also taught himself calculus, edited the school newspaper, and achieved a near-perfect SAT score of 1590 out of 1600.<10> He was also an All-State saxophonist, playing in the school’s marching band.<11>

. . . .
Bernanke spent his undergraduate years at Harvard University and graduated with a BA in economics summa cum laude in 1975. To support himself throughout college, he worked during the summers at South of the Border, a roadside attraction in his hometown of Dillon.<3><12> He received a PhD in economics from the Massachusetts Institute of Technology in 1979. His thesis was named "Long-term commitments, dynamic optimization, and the business cycle" and his thesis adviser was Stanley Fischer.<13>
. . . .
Bernanke taught at the Stanford Graduate School of Business from 1979 until 1985, was a visiting professor at New York University and went on to become a tenured professor at Princeton University in the Department of Economics. He chaired that department from 1996 until September 2002, when he went on public service leave. He resigned his position at Princeton July 1, 2005. Dr. Bernanke served as a member of the Board of Governors of the Federal Reserve System from 2002 to 2005, and was Chairman of the President's Council of Economic Advisers, from June 2005 to January 2006. On February 1, 2006, he was appointed as a member of the Board for a fourteen-year term and to a four-year term as Chairman.<14>

http://en.wikipedia.org/wiki/Ben_Bernanke

Donald L. Kohn

Kohn was born in Philadelphia, Pennsylvania. He received a B.A. in economics in 1964 from The College of Wooster and a Ph.D. in economics in 1971 from the University of Michigan. Kohn and his wife, Gail, have two children, Laura and Jeffrey, both married with children.
. . . .
Kohn is a veteran of the Federal Reserve System. Before becoming a member of the Board, he served on its staff as Adviser to the Board for Monetary Policy (2001-02), Secretary of the Federal Open Market Committee (1987-2002), Director of the Division of Monetary Affairs (1987-2001), and Deputy Staff Director for Monetary and Financial Policy (1983-87). He also held several positions in the Board's Division of Research and Statistics--Associate Director (1981-83), Chief of Capital Markets (1978-81), and Economist (1975-78). Dr. Kohn began his career as a Financial Economist at the Federal Reserve Bank of Kansas City (1970-75).

Kohn took office as a member of the Board of Governors of the Federal Reserve on August 5, 2002 for a full term ending January 31, 2016. On May 18, 2006, the White House announced that Kohn had been nominated by President George W. Bush to replace Roger W. Ferguson, Jr. as the new vice chairman of the Federal Reserve System for a four-year term. The United States Senate approved his nomination, and Kohn began serving his four-year term as Vice Chairman of the Board of Governors of the Federal Reserve System on June 23, 2006.
http://en.wikipedia.org/wiki/Donald_Kohn

Kevin Warsh
Warsh grew up near Albany and attended Shaker High School in Latham. He received an A.B. in public policy (with honors) from Stanford University in 1992 with a concentration in economics and political science. He went on to study law at Harvard Law School and received a J.D. (cum laude) in 1995. He also took coursework in market economics and debt capital markets at Harvard Business School and the MIT Sloan School of Management.

From 1995 to 2002, Warsh worked for Morgan Stanley in New York City, ultimately becoming a Vice President and Executive Director in the company's Mergers and Acquisitions Department. In 2002 Warsh married Jane Lauder, a granddaughter and heiress of Estée Lauder, who is currently General Manager of Origins, an Estée Lauder company.<3>

From 2002 to 2006, Warsh was Special Assistant to the President for Economic Policy, and Executive Secretary of the National Economic Council. His primary areas of responsibility included domestic finance, banking and securities regulatory policy, and consumer protection. He advised the President and senior administration officials on issues related to the U.S. economy, particularly fund flows in the capital markets, securities, banking, and insurance issues. Warsh participated in the President's Working Group on Financial Markets and served as the administration's chief liaison to the independent financial regulatory agencies.

President Bush nominated Warsh and Randall Kroszner to fill two Fed vacancies on January 27, 2006. Warsh's nomination drew some criticism, based on his age (at 35 years old, he was the youngest appointment in the history of the Federal Reserve) and inexperience (Warsh is an attorney, not a trained economist). At the time, former Fed vice chairman Preston Martin said it (Warsh's nomination) was "not a good idea" and that if he had a voice in the Senate, he would vote no.<4> However, Warsh impressed colleagues, especially Fed Chairman Ben Bernanke, with his insights and political savvy,<5> and he has played a significant role in navigating the financial market turmoil of 2007 and 2008. <6>
http://en.wikipedia.org/wiki/Kevin_Warsh

Elizabeth A. Duke
Elizabeth Duke was born in Portsmouth, Virginia and grew up in Virginia Beach, Virginia. She first studied physics at North Carolina State University before transferring to the University of North Carolina at Chapel Hill, where she graduated with a bachelor of fine arts in drama in 1974. After graduating, she worked as a part-time teller at First and Merchants National Bank in Virginia Beach because she "needed a job."
. . . .
In 1978, she became the vice president and chief financial officer of the Bank of Virginia Beach. While working full time, she attended Old Dominion University part time and received her MBA in 1983. She transferred to the Bank of Tidewater in 1985 as vice president and chief financial officer. She became its president in 1987 and chief executive officer in 1991. She was selected as a director of the Federal Reserve Bank of Richmond in 1998 and, in 1999, she was elected president of the Virginia Bankers Association. Duke remained as president and CEO of Bank of Tidewater until it was acquired by SouthTrust in 2001. SouthTrust made her executive vice president of community bank development. When Wachovia acquired SouthTrust in 2004, Duke remained an executive VP, but in charge of the merger project office. She was also elected chairman of the American Bankers Association for the 2004-05 year. In 2005, she became senior executive vice president and chief operating officer of TowneBank. She was nominated to the Board of Governors of the Federal Reserve by President George W. Bush on May 15, 2007.
http://en.wikipedia.org/wiki/Elizabeth_A._Duke

Daniel K. Tarullo

Daniel K. Tarullo, a former economic official in the Clinton administration, is expected to become a member of the Federal Reserve board in Washington. A law professor at Georgetown University Law Center, he led President-elect Barack Obama’s transition team at the Treasury Department, and is considered an expert in international economic regulation.

The selection of Mr. Tarullo to fill one of two vacant seats on the Fed's board, will allow Mr. Obama to begin making his mark on the nation's bank. All of the current board members, including the chairman Ben S. Bernanke, were hand-picked by President Bush.

Mr. Tarullo graduated summa cum laude in 1977 from the University of Michigan Law School; he received an A.B. from Georgetown in 1973 and an M.A. at Duke University in 1974.

http://topics.nytimes.com/top/reference/timestopics/people/t/daniel_k_tarullo/index.html

So, the board of the Federal Reserve is made up of three academics and two bankers. Hard to tell the business affiliations if any of the academics -- at least from the bios that I found.

[meow2u3]

16. I'd like to see white-collar criminals treated like street thugs

Because they are street thugs--Wall Street thugs, that is!

[SOS]

20. Separate commercial and investment banks

Put Glass-Steagall back in place.

Operate commercial banks as highly-regulated, FDIC-insured public utilities.
Eliminate all abusive practices in the commercial sector.
Completely deregulate investment banking on the condition that they are barred from ever receiving any government money.

No "supercop" needed.

[Phred42]

22. the Fed has been an utter failure - and we should give them MORE power over us?

The only way this would work and make sense is if Obama does the right thing and takes over the Fed... and fires all of the Goldman Sachs alumni currently there.

Let’s not forget that the Federal Reserve is a PRIVATE FOR PROFIT CORPORATION. He might as well be giving control to ENRON and be done with it.


"Let's appoint Osama Bin Laden to destroy al Qaeda."

[Baby Snooks]

23. "Permit me to issue and control the money of a nation..."

"Permit me to issue and control the money of a nation and I care not who makes its laws."

Those are the words of a man named Mayer Amschel Bauer. Also known as Mayer Amschel Rothschild. Uttered about the time we were declaring our independence. Uttered while he watched and wondered which son he could send to establish the Rothschilds here. Alas there were no more sons.

But his sons eventually had sons here. They adopted them. JP Morgan in particular. And the Rockefellers. We know them all as the robber barons. The great empire builders. No one ever stops to think about where they got the cash to build their empires.

The Federal Reserve Bank was supposedly created to protect us from the robber barons. In reality the Federal Reserve was created to protect the robber barons from us. Some believe the Rothschilds may have wanted to protect us from the robber barons. And the robber barons knew it.

Many were outraged by this idea of a central bank. Many mentioned the Rothschilds. We could not turn a central bank over to foreigners for one thing. There was a lot of rhetoric. And probably a Rothschild standing nearby. Laughing. Over half the shares in the original Federal Reserve Bank went to Rothschilds. The rest, well, they controlled. And probably still do. Or did.

The Rothschilds really don't like collapsing economies. It costs them too much cash. They like cash. Not credit. And they liked to put the cash to work. Venture capitalism. You didn't borrow from the Rothschilds. You put up some money and went into business with them. And those who did got very rich. And the Rotschilds got even richer. Cash is king. Their family fortune is still in cash. A little here, a little there, a little everywhere. Estimated in the trillions.

But their power, or perhaps their direction is a better way to look at it because obviously they do know what they're doing, didn't last.

And as others took over, the history gets a little fuzzy. Particulary at the National Archives. Same National Archives where the findings of the Nye Commission, which investigated the "military-industrial complex" of the 1920s and 1930s, were shredded and tossed because they were just "wasting space" the archives needed, and no one said a word but who does anymore, along with investigations of individuals including Prescott Bush. When it comes to money, more is merrier for the Bushes. When it comes to the National Archives, less is.

But there's there's enough left for anyone to realize you do not want the Federal Reserve Bank becoming the guardhouse for the henhouse. Particularly at this point. And not because the Rothschilds still control it. Because the Rothschilds no longer do.

Machiavellian politics do not mix well with Machiavellian economics. Suddenly the Rothschilds did care who made the laws. And pulled out so to speak. There were too many Rothschild-wannabes. A certain family in particular. The Bush family.

Someone is still trying to become a Rothschild. Maybe a Bush, maybe a Baker, maybe one of the Candlestickmakers. The Candlestickmakers. The men who make their profit off war and off the candlesticks they make.

And such lovely candlesticks. Shock and awe indeed. The new fireworks displays. We watch and we are awed. As we are meant to be. And then we wave the flag. We sing "And the rockets red glare..." and think we are just the greatest nation on earth. As we conquer the other nations on earth. Plundering as we go. Some of us even go a little nuts and believe Lee Greenwood is one of the founding fathers and start singing "And I'm proud to be an American..."

Whoever they are they are obviously getting a little assistance from whomever is advising this administration.

And we all know who that is.

[dixiegrrrrl]

25. Someone is still trying to become a Rothschild.

Yep/ David Rockefeller.

Most American still believe the Fed. is a government facility.

Most American do not remember that this idea of making the FED the regulator was voiced by Paulson:
.
Paulson to Urge New Fed Powers

Source: Washington Post...June 19, 2008

Bank Would Help Police Wall Street

Treasury Secretary Henry M. Paulson Jr. plans to call today for the Federal Reserve to be given new, explicit powers to intervene in the workings of Wall Street firms to protect the financial system, adapting his vision of how the financial world should be regulated to reflect the lessons of the collapse of Bear Stearns.

"Our nation has come to expect the Federal Reserve to step in to avert events that pose unacceptable systemic risk," Paulson plans to say in a speech today, according to prepared remarks obtained by The Washington Post. But the central bank "has neither the clear statutory authority nor the mandate to anticipate and deal with risks across our entire financial system."

"We should quickly consider how to appropriately give the Fed the authority to access necessary information from highly complex financial institutions and the responsibility to intervene in order to protect the system," Paulson plans to say, "so they can carry out the role our nation has come to expect."

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/18/AR2008061803225.html?hpid=topnews


Here is the DU thread and comments, including mine, about it:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3358602

Geithner is just a Paulson mini-me, and god knows who pulls Paulson's strings, but if you check
Giethner's ethics contract letter,
esp. p. 2, you will see his list of prior memberships/boards/associations, including Pres. of
FED Reserve Bank, NY;, RAND Corp; Tri-Lateral Commission; Council on Foreign Relations;
The Group of 30, etc.

LINK HERE:
http://documents.propublica.org/obama-administration-ethics-agreements/page/145

If you do not know what these groups are and why his membership is so troubling, I suggest Wiki.
His "ethics" letter also gives him permission to practice conflict of interest with any FED Bank decisions.


Making the FED the "regulator" is actually a plan in line with The Shock Doctrine, where the
"solution" to the often "manufactured" crisis is worse than the crisis.

This plan is the ultimate disaster for our shredded economy, and removes ALL control of financial oversight from Congress.

[SimonBolivar]

24. Bad Idea

This is troubling because the Fed is not a government agency.

[Demeter]

26. Fiscal Physician Heal Thyself!

Putting the Fox in charge of the hens--that's a GOP trick! This kind of bipartisanship we can live without.

[OwnedByFerrets]

27. Cant wait to hear Tom Hartmann discuss this decision.

[aquart]

28. That Chicago School is addling his very fine brains.

I thought Afghanistan would be his VietNam. But now I'm thinking it will be the banks.

[jody]

31. Corporatist control the non-govt Fed so this would be a significant move toward a corporate state

as envisioned by Benito Mussolini.

The next step is to create an organization combining union and non-union labor so the Fed and Labor-Central can make the right decisions for the U.S.

I've read accounts of the fascist/corporatist plot against FDR in the 1930s claiming John L. Lewis, chief of the CIO, wanted to head the labor sector.

Benito Mussolini: "Fascism should more appropriately be called Corporatism because it is a merger of State and corporate power."

Adolf Hitler: "We stand for the maintenance of private property... We shall protect free enterprise as the most expedient, or rather the sole possible economic order."

[stoll]

33. Is this an April fools joke?

The Administration just keeps throwing Red Herrings all over the place, but this tidbit is the most ridiculous of them all. The Fed is going to be the “financial supercop”. Please! This article is so loaded with bullshit I can hardly contain myself. This heap of trash idea needs to be dumped out.

Right from the beginning, the article states,“The White House told industry officials on Friday that it is leaning toward recommending that the Federal Reserve become the supercop for "too big to fail" companies capable of causing another financial meltdown.” Now, I know the Administration is full of smart people, but they must have all been going through a brain fart when this idea was conjured up. I have a novel idea, how about just busting up those companies that are to big to fail. Or even better, reenact the Glass-Steagell Act to prevent companies from becoming to big to fail. Because lets be honest, when the Administration wants a Uber-financial regulator for to big to fail companies, they are talking about banks, specifically the usually suspects, or what most politicians on Capital Hill call their daddy. So those options are out.

As Dean Baker pointed out in his article on Counter Punch, “Why Economists Should Learn Arithmetic”, any basic economist should have seen that the country’s growth was an illusion. Did we not have the Maestro himself Alan Greenspan declaring derivatives to be a stabilizing instrument because it spread risk? Well, he was absolutely right about the fact that they did spread risk. And didn't Greenspan say that some of the financial instruments that brought down the country were so complex mathimatically that he did not understand them. (House of Cards on CNBC) How the hell would the financial supercop regulate those. I could go on but to sum up this idea is pure crap.

[anonymous171]

34. I want to see what Barney Frank has to say about this before I make any judgement. nt