"Giving
money and power to government is like giving whiskey and car keys to
teenage boys." --P.J. O’Rourke
So
the Treasury Department wants Congress to gift the Federal Reserve with
broad new authority and power to ride rough shod over financial market
stability (or lack thereof). The New York Times described it as “allowing
it to send SWAT teams into any corner of the industry or any institution
that might pose a risk to the overall system.”
Giving
the Fed more power is like giving crack cocaine to jihadists…it’s
NOT a good idea.
This
latest bureaucratic brain flatulence is part of a far reaching master
plan to overhaul the nation’s mishmash of financial regulatory
agencies. This ‘slamming the door after the horse is out of the
barn’ is a result of what braniacs say is needed to mitigate the
failure to recognize wild excesses in mortgage lending until after they
sparked what is now allegedly the worst financial calamity in decades.
Before
passing the buck (BIG bucks) to the Fed to solve problems Congress should
be, and is required, to address, a few basics need to be reiterated.
I
have interviewed Eustace Mullins several times, and he has been screaming
for decades the empirical reality that,
The Federal Reserve System is not Federal; it has no reserves
From November, 1910 the maneuverings of the Federal Reserve bankers
have been shrouded in secrecy.
That secrecy has cost the American people trillions of dollars in
debt, with annual interest payments to these bankers amounting to
over three hundred billion dollars per year.
When I filed this column the outstanding public debt was $9,416,953,744,070.69.
National Debt increases an overage of $1.66 BILLION per day.
Donald J. Winn,
Assistant to the Board of Governors in response to an inquiry by Congressman,
Norman D. Shumway, on March 10, 1983.
Mr. Winn
states that "The Federal Reserve System was established by
an act of Congress in 1913 and is not a ‘private corporation’."
On the next
page, Mr. Winn continues, "The stock of the Federal Reserve
Banks is held entirely by commercial banks that are members of the
Federal Reserve System."
He offers
no explanation as to why the government has never owned a single
share of stock in any Federal Reserve Bank, or why the Federal Reserve
System is not a "private corporation" when all of its
stock is owned by "private
corporations."
Thomas
Jefferson expressed his opinion about the concept of an entity like
the Fed when he wrote, “I consider the foundation of the Constitution
as laid on this ground--that all powers not delegated to the United
States, by the Constitution, nor prohibited by it to the states, are
reserved to the states, or to the people (12th amend.). To take a single
step beyond the boundaries thus specially drawn around the powers of
Congress, is to take possession of a boundless field of power, no longer
susceptible of any definition.”
“The
incorporation of a bank...have not, in my opinion, been delegated to
the United States by the Constitution.” Of course that was before
the evisceration of the Constitution in 1913.
Meanwhile,
Democrat lawmakers (the same malfeasant cowards who shirk their responsibility
to declare war, and now want to create another scapegoat to take their
heat) are all but certain to say the steroid shot for the Fed does not
go far enough in restricting the kinds of practices that caused the
financial crisis.
So
what is behind the headline about this ‘new’/old plan?
The plan would consolidate a gaggle of banking and securities regulators
into “a powerful trio of overseers responsible for everything
from banks and brokerage firms to hedge funds and private equity firms.”
It artfully avoids a call for tighter regulation.
The plan would not rein in practices that have been linked to the
housing and mortgage crisis.
The
plan gives the Fed ‘some’ authority over Wall Street
firms, but only when an investment bank’s practices
threatened the entire financial system.
The plan does not recommend tighter rules over the
huge and mostly unregulated markets for risk sharing and hedging.
The plan could reduce the power of the Securities and Exchange Commission.
One
red flag should be that Paulson’s pitch for the Fed mirrors the
ideas of Representative Barney Frank, who is chairman of the House Financial
Services Committee.
The
Bear Stearns flap is instructive. For the first time since the 1930s,
the Fed agreed to allow investment banks to borrow hundreds of billions
of dollars.
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This
plan would ‘consolidate’ a large number of regulators into
roughly three big new agencies.
In
Lewis v. United States, the United States Court of Appeals
for the Ninth Circuit stated that "the Reserve Banks are not federal
instrumentalities…but are independent, privately owned and locally
controlled corporations." THAT is the fox Congress wants to guard
our financial hen house…
"Geoff Metcalf is a nationally
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Meanwhile,
Democrat lawmakers (the same malfeasant cowards who shirk their responsibility
to declare war, and now want to create another scapegoat to take their
heat)...
