$16 Trillion Dollars...

[Fransisco]

http://beforeitsnews.com/economy/2012/09/first-audit-in-the-federal-reserves-nearly-100-year-history-were-posted-today-the-results-are-startling-2449770.html


First Audit Results In The Federal Reserve’s Nearly 100 Year History Were Posted Today, They Are Startling!

The first ever GAO (Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out.

Ben Bernanke (pictured to the LEFT), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning.

What was revealed in the audit was startling:

$16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious – the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200 year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.


“This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”- Bernie Sanders (I-VT)

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

The list of institutions that received the most money from the Federal Reserve can be found on page 131of the GAO Audit and are as follows..

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
and many many more including banks in Belgium of all places

[TOM4CWB]

The Fed Audit

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July 21, 2011

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."

To read the GAO report, click here.

[TOM4CWB]

http://www.sanders.senate.gov/imo/media/doc/d1218%20(2).pdf

Why GAO Did This Study

Events surrounding the 2007 financial crisis raised questions about the governance of the 12 Federal Reserve Banks (Reserve Banks), particularly the boards of directors’ roles in activities related to supervision and regulation. The Dodd-Frank Wall Street Reform and Consumer Protection Act required GAO to review the governance of the Reserve Banks. This report (1) analyzes the level of diversity on the boards of directors and assesses the extent to which the process of identifying possible directors and appointing them results in diversity on the boards, (2) evaluates the effectiveness of policies and practices for identifying and managing conflicts of interest for Reserve Bank directors, and (3) compares Reserve Bank governance practices with the practices of selected organizations. To conduct this work, GAO reviewed bylaws, policies, and board minutes for each Reserve Bank, conducted a survey of directors who served in 2010, reviewed governance policies at comparable institutions, and interviewed officials from the Board of Governors of the Federal Reserve System (Federal Reserve Board) and Reserve Banks, directors from each bank, and selected academics.
What GAO Recommends
GAO makes four recommendations
to the Federal Reserve Board aimed at enhancing the diversity of the Reserve Bank boards, strengthening policies for managing conflicts of interest, and enhancing transparency related to board governance. The Federal Reserve Board agreed with GAO’s recommendations and said that it believes all have merit and will work to implement them. The Reserve Banks also said that they will give serious consideration to implementing the recommendations.

What GAO Found

The Federal Reserve Act requires each Reserve Bank to be governed by a nine-member board—three Class A directors elected by member banks to represent their interests, three Class B directors elected by member banks to represent the public, and three Class C directors that are appointed by the Federal Reserve Board to represent the public. The diversity of Reserve Bank boards was limited from 2006 to 2010. For example, in 2006 minorities accounted for 13 of 108 director positions, and in 2010 they accounted for 15 of 108 director positions. Specifically, in 2010 Reserve Bank directors included 78 white men, 15 white women, 12 minority men, and 3 minority women. According to the Federal Reserve Act, Class B and C directors are to be elected with due but not exclusive consideration to the interests of agriculture, commerce, industry, services, labor, and consumer representation. During this period, labor and consumer groups had less representation than other industries. In 2010, 56 of the 91 directors that responded to GAO’s survey had financial markets experience. Reserve Banks generally review the current demographics of their boards and use a combination of personal networking and community outreach efforts to identify potential candidates for directors. Reserve Bank officials said that they generally limit their director search efforts to senior executives. GAO’s analysis of Equal Employment Opportunity Commission data found that diversity among senior executives is generally limited. While some Reserve Banks recruit more broadly, GAO recommends that the Federal Reserve Board encourage all Reserve Banks to consider ways to help enhance the economic and demographic diversity of perspectives on the boards, including by broadening their potential candidate pool.
The Federal Reserve System mitigates and manages the actual and potential conflicts of interest by, among other things, defining the directors’ roles and responsibilities, monitoring adherence to conflict-of-interest policies, and establishing internal controls to identify and manage potential conflicts. Reserve Bank directors are often affiliated with a variety of financial firms, nonprofits, and private and public companies. As the financial services industry evolves, more companies are becoming involved in financial services or interconnected with financial institutions. As a result, directors of all three classes can have ties to the financial sector. While these relationships may not give rise to actual conflicts of interest, they can create the appearance of a conflict as illustrated by the participation of director-affiliated institutions in the Federal Reserve System’s emergency programs. Moreover, some critics question the Reserve Bank boards’ involvement in supervision and regulation activities. GAO found that directors have a limited role in these activities, including voting on certain budget and personnel actions. Moreover, some Reserve Banks have further restricted the responsibilities of Class A directors, prohibiting their involvement in any personnel or budget decisions for this function. However, most Reserve Banks’ bylaws do not document the role of the board in supervision and regulation. To increase transparency, GAO recommends that all Reserve Banks clearly document the directors’ role in supervision and regulation activities in their bylaws. One option for addressing directors’ conflicts of interest is for the Reserve Bank to request a waiver from the Federal Reserve Board, which, according to officials, is rare. Most Reserve Banks do not have a process for formally requesting such waivers. To strengthen governance practices and increase transparency, GAO recommends that the Reserve Banks develop and document a process for requesting conflict waivers for directors. Further, GAO recommends that the Reserve Banks publicly disclose when a waiver is granted, as appropriate.
The Federal Reserve System’s governance practices are generally similar to those of selected central banks and comparable institutions such as bank holding companies and have similar selection procedures for directors. Further, most have similar accountability measures such as annual performance reviews. However, Reserve Bank governance practices tend to be less transparent than those of these institutions. For instance, comparable organizations make information on their board committees and ethics policies available on their websites; most Reserve banks do not. To further enhance transparency of Reserve Bank governance, GAO recommends that Reserve Banks make public key governance documents, such as bylaws, ethics policies, and committee assignments, by posting them to their websites.
conflicts related to Reserve Banks’ emergency actions,
existing standards for managing employee conflicts may
not be sufficient to avoid the appearance of a conflict in all
situations. As the Federal Reserve System considers
revising its conflict policies given its new authority to
regulate certain nonbank institutions, GAO recommends it
consider how potential conflicts from emergency lending
could inform any changes. FRBNY managed vendor
conflict issues through contract protections and actions to
help ensure compliance with relevant contract provisions,
but these efforts had limitations. For example, while
FRBNY negotiated important contract protections, such as
requirements for ethical walls, it lacked written guidance on
protections that should be included to help ensure vendors
fully identify and remediate conflicts. Further, FRBNY’s onsite
reviews of vendor compliance in some instances
occurred as far as 12 months into a contract. FRBNY
implemented a new vendor management policy but has
not yet finalized another new policy with comprehensive
guidance on vendor conflict issues. GAO recommends
FRBNY finalize this new policy to reduce the risk that
vendors may not be required to take steps to fully identify
and mitigate all conflicts.
While the Federal Reserve System took steps to mitigate
risk of losses on its emergency loans, opportunities exist to
strengthen risk management practices for future crisis
lending. The Federal Reserve Board approved program
terms and conditions designed to mitigate risk of losses
and one or more Reserve Banks were responsible for
managing such risk for each program. Reserve Banks
required borrowers under several programs to post
collateral in excess of the loan amount. For programs that
did not have this requirement, Reserve Banks required
borrowers to pledge assets with high credit ratings as
collateral. For loans to specific institutions, Reserve Banks
negotiated loss protections with the private sector and
hired vendors to help oversee the portfolios that
collateralized loans. The emergency programs that have
closed have not incurred losses and FRBNY does not
project any losses on its outstanding loans. To manage
risks posed by these new lending activities, Reserve
Banks implemented new controls and FRBNY
strengthened its risk management function. In mid-2009,
FRBNY created a new risk management division and
enhanced its risk analytics capabilities. But neither FRBNY
nor the Federal Reserve Board tracked total exposure and
stressed losses that could occur in adverse economic
scenarios across all emergency programs. Further, the
Federal Reserve System’s procedures for managing
borrower risks did not provide comprehensive guidance for
how Reserve Banks should exercise discretion to restrict
program access for higher-risk borrowers that were
otherwise eligible for the Term Auction Facility (TAF) and
emergency programs for primary dealers. To strengthen
practices for managing risk of losses in the event of a
future crisis, GAO recommends that the Federal Reserve
System document a plan for more comprehensive risk
tracking and strengthen procedures to manage program
access for higher-risk borrowers.
While the Federal Reserve System took steps to promote
consistent treatment of eligible program participants, it did
not always document processes and decisions related to
restricting access for some institutions. Reserve Banks
generally offered assistance on the same terms to
institutions that met announced eligibility requirements. For
example, all eligible borrowers generally could borrow at
the same interest rate and against the same types of
eligible collateral. Reserve Banks retained and exercised
discretion to restrict or deny program access for institutions
based on supervisory or other concerns. For example, due
to concerns about their financial condition, Reserve Banks
restricted TAF access for at least 30 institutions. Further, in
a few programs, FRBNY placed special restrictions, such
as borrowing limits, on eligible institutions that posed
higher risk of loss. Because Reserve Banks lacked specific
procedures that staff should follow to exercise discretion
and document actions to restrict higher-risk eligible
borrowers for a few programs, the Federal Reserve
System lacked assurance that Reserve Banks applied
such restrictions consistently. Also, the Federal Reserve
Board did not fully document its justification for extending
credit on terms similar to the Primary Dealer Credit Facility
(PDCF) to affiliates of a few PDCF-eligible institutions and
did not provide written guidance to Reserve Banks on
types of program decisions that would benefit from
consultation with the Federal Reserve Board. In 2009,
FRBNY allowed one entity to continue to issue to the
Commercial Paper Funding Facility, even though a change
in program terms by the Federal Reserve Board likely
would have made it ineligible. FRBNY staff said they
consulted the Federal Reserve Board regarding this
situation, but did not document this consultation and did
not have any formal guidance as to whether such
continued use required approval by the Federal Reserve
Board. To better ensure an appropriate level of
transparency and accountability for decisions to extend or
restrict access to emergency assistance, GAO
recommends that the Federal Reserve Board set forth its
process for documenting its rationale for emergency
authorizations and document its guidance to Reserve
Banks on program decisions that require consultation with
the Federal Reserve Board.

[wd9]

Everyone in north america should not pay
their mortgage, loan, credit, nothing.
Tell every last bank and institution to
piss off. Wonder what would happen? Even
just for a month.

Sweet payback.

[TOM4CWB]

Clint:

Go Ahead...

t;iframe width="560" height="315" src="http://www.youtube.com/embed/2pQwbRPwccY" frameborder="0" allowfullscreen></iframe>

[wilagro]

Tom: You are really quite a "brainwashed" Repug...there really is no hope for you.

[monte]

I am not sure Clint helped Romney the other night. Seemed a little goofy to me.

[cottonpicken]

"not pay their debt back"?

Funny unless its you holding the bond,which many
pension funds,mutual fund,hedge funds and
individual do,and even governments which would
make you pay more in tax incase of a right
down,funny eh?

Have heard the bank of canada had a loan program
going,would not be surprised.

[wd9]

Round and round the money goes but doesn't
really exist.

[sumdumguy]

America has been given away, plain and simple.
Think Americans are going to take this little tidbit
with a wink of the eye?

Where is Canada in this equation?

[sumdumguy]

By the way. Was there ever an accountability
audit done on the CWB?

[cottonpicken]

Oddly enough the federal debt crossed 16 trillion
today.

First trillion took 200 years to rack up,now every 6
months,soon to be every month,ah the magic of
exponential function.

[haveapulse]

The majority of the funds went to bank:
This is from THE ECONOMIST July 14/2012

THE crisis has taught people a lot about the banking industry and the thought processes of its leaders. These lessons can be distilled into four golden rules.

1. The laws of supply and demand do not apply. When food producers compete to supply a supermarket, the retailer has the luxury of selecting the lowest bidder. But when it comes to investment banking, wages are very high even though the number of applicants is vastly greater than the number of posts. If the same was true of, say, hospital cleaning, wages would be slashed.

In this sectionThe fog of LIBOR
Investigations galore
Maxing out
»The golden rules of banking
QE, or not QE?
Hammer time

Reprints

--------------------------------------------------------------------------------
Related topics
Securities Services
Investment banking
Investment services
Richard Fuld
George Soros

An investment bank, like a supermarket, demands a certain quality standard: it will not hire just anybody. But whereas it may be easy to identify a rotten banana, it is harder to be sure which trainee will be the next Nick Leeson and which the potential George Soros. That gives executives an excuse when things go wrong.

2. Success is down to my genius; failure is caused by someone else. When banks do well, and profits soar, the bosses are responsible for it all with their strategic cunning and inspiring leadership. Huge bonuses are therefore due.

But, like Macavity the mystery cat, executives were never at the scene of the crime. They did not attend the crucial meeting, read the vital memo or open the incriminating e-mail. Together with this surprising inattentiveness, executives have a remarkably faulty memory which means that conversations are rarely recalled in any detail. It is a wonder, indeed, given their technical shortcomings and early-onset Alzheimer’s, that they make it to the top of their organisations at all.

But executives do tend to remember one vital fact. When scandal breaks, the blame should lie with a few rogue employees who have ignored the corporate culture. Managers cannot possibly be expected to keep track of the actions of junior staff. And that leads to the next rule.

3. What is lucky for an individual trader may be unlucky for the bank as a whole. There is a survivorship bias in both fund management and trading. If your career starts with some bad losses, it will quickly come to an end. So, by definition, veteran traders will have had initial success. But that could be down to luck, not skill.

Successful fund managers attract more clients and thus manage more money. This will keep happening until they have a bad year, when clients will desert them. Their worst result will thus occur when they have the most money to look after. They may end up losing more client money in cash terms than they ever made.

Similarly, successful traders will be given more responsibility, first heading their departments and then leading the bank itself. They will gain a reputation as the kind of person who can handle risk, and they will believe their own publicity. The likes of Dick Fuld of Lehman Brothers and Jon Corzine at MF Global seemed to regard caution as a quality for wimps.

This is a variant of the Peter principle, which holds that managers get promoted to their level of incompetence. The trader-cum-executive will make the biggest mistake when he is in charge of the whole bank. By this stage, he will be personally rich and will remain so even if the entire bank fails, not least because:

4. Resigning can be a retirement plan. When ordinary folk resign, they are lucky to get paid to the end of the month. But when bankers leave in awkward circumstances, they make out like a lottery winner (Bob Diamond, formerly of Barclays, has done worse on this score than others). The bank may want to avoid a lawsuit, with all its unfavourable publicity. The more trouble the bank is in, the less publicity it will want and the better the negotiating position of the executive. This may not be the ideal incentive structure.

Moreover, if the bank is big enough, the government will not be willing to let it fail. Take the Royal Bank of Scotland. Had it gone bankrupt, then the pension scheme might have fallen into the hands of the Pension Protection Fund (PPF), a collective-insurance plan. That would have been bad news for Fred Goodwin, the then chief executive, since individual pension payouts are capped under PPF rules. The limit at the time was £24,000 ($44,500) rather than the £703,000 he originally claimed.

Bankers get such generous payoffs because it is in their contracts and airtight contracts are needed to attract the best people. But is this right? The BBC just appointed a director-general on a salary that is one-third less than that of the previous incumbent. Even so, there was no shortage of qualified applicants for the post. Back to the first rule: in banking, the laws of supply and demand do not apply.



Economist.com/blogs/buttonwood