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The Eye Popping Fed Audit

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Editor's note: Paul Craig Roberts suggested this article by Bernie Sanders be posted and the editor who received it misunderstood and thought it was by Roberts.

There is no better example of the US government's attitude of "let them eat cake" than the following alert presented by Vermont's Senator Bernie Sanders, who is the longest serving independent member of Congress in American history... I implore you to read -- and then re-read -- the results of this critical investigation. 

Fed Audit

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.


Bernie Sanders is the independent U.S. Senator from Vermont. He is the longest serving independent member of Congress in American history. He is a member of the Senate's Budget, Veterans, Environment, Energy, and H.E.L.P. (Health, Education, (more...)

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The Fed Audit is from Senator Sanders' web site. &... by Paul Craig Roberts on Friday, Jul 22, 2011 at 1:32:48 PM
Bernie Sanders is a brave man. Bernie Sanders is a... by Debbie S on Friday, Jul 22, 2011 at 2:00:21 PM
disgusting.... by BaronVonRothschild on Friday, Jul 22, 2011 at 1:45:44 PM
What is most cruel about the Great Recession of 20... by Blaine Kinsey on Friday, Jul 22, 2011 at 1:51:04 PM
All driven by "Conflict of Interest" double standa... by Lewis Yang on Friday, Jul 22, 2011 at 1:57:37 PM
I have long admired Sen. Sanders for his work and ... by John Little on Friday, Jul 22, 2011 at 2:22:57 PM
lots of luck in reforming THE FED.. Initiating or ... by Donald on Friday, Jul 22, 2011 at 2:51:06 PM
Takes time but has the info.... by H. Gruber on Friday, Jul 22, 2011 at 3:02:41 PM
Everything that Roberts writes it true, but it doe... by R A Bows on Friday, Jul 22, 2011 at 3:27:59 PM
A few years ago, I started using the term 'hostage... by martin weiss on Friday, Jul 22, 2011 at 7:39:25 PM
What kind of work ethic does Paul Craig Roberts ha... by Jack Heart on Friday, Jul 22, 2011 at 4:29:15 PM
Yes they own everything and our elected officials ... by Robert Tracey on Friday, Jul 22, 2011 at 5:46:44 PM
Our own Westpac bank scored several million dollar... by Dr Stuart Jeanne Bramhall on Friday, Jul 22, 2011 at 6:59:17 PM
nazi, commies, socialists.  False flag operat... by John Smith on Friday, Jul 22, 2011 at 10:55:52 PM
But the money - or ink - provided by The Fed has t... by Keith Pope on Saturday, Jul 23, 2011 at 1:24:39 AM
credit union only., no debit cards, cash or check ... by thepiffler on Saturday, Jul 23, 2011 at 4:20:59 PM
Though at times it seems there will never be justi... by Donald Carl Isenman on Saturday, Jul 23, 2011 at 1:39:21 AM
A more detailed GAO investigation into potential ... by Michael Dewey on Saturday, Jul 23, 2011 at 6:13:13 AM
"An amendment by Sen. Bernie Sanders to the Wall S... by Rixar13 on Saturday, Jul 23, 2011 at 6:36:15 AM
"An amendment by Sen. Bernie Sanders to the Wall S... by Rixar13 on Saturday, Jul 23, 2011 at 6:38:38 AM
... by Ned Lud on Saturday, Jul 23, 2011 at 8:55:23 AM
Let's restore our rights to control the government... by Mark Adams JD/MBA on Saturday, Jul 23, 2011 at 2:54:20 PM
Americans might become more interested in the "FED... by Ray O. Sunshine on Saturday, Jul 23, 2011 at 5:59:29 PM
Bernie, I'm a constituent, I re-posted the above h... by Steven G. Erickson on Sunday, Jul 24, 2011 at 8:10:34 AM
A whopping fraud continues to be perpetrated on ... by John Rachel on Monday, Jul 25, 2011 at 3:02:30 AM
"It is class warfare and THEY are ordering the p... by Michael Rose on Monday, Jul 25, 2011 at 5:19:25 PM