Tuesday, May 29, 2012
Friday, May 25, 2012
OBOF SS & MORE PART 36 EXTRA
WELCOME TO OPINIONS BASED ON FACTS (OBOF)
| Name | Published |
| OVERVIEW | Dec. 28, 2010 |
| SOCIAL SECURITY PART 1 | Dec. 30, 2010 |
| SOCIAL SECURITY PART 2 | Jan. 10, 2011 |
| SOCIAL SECURITY PART 3 | Jan. 17, 2011 |
| SOCIAL SECURITY PART 4 | Jan. 24, 2011 |
| SOCIAL SECURITY PART 5 | Jan. 31, 2011 |
| SOCIAL SECURITY PART 6 | Feb. 07, 2011 |
| SOCIAL SECURITY PART 7 | Feb. 14, 2011 |
| SPECIAL ISSUE | Feb. 18, 2011 |
| SOCIAL SECURITY PART 8 | Feb. 21, 2011 |
| SOCIAL SECURITY PART 9 | Mar. 01, 2011 |
| SOCIAL SECURITY PART 10 | Mar. 07, 2011 |
| SS & MORE PART 1 | Mar. 14, 2011 |
| SS & MORE PART 1A | Mar. 21, 2011 |
| SS & MORE PART 2 | Mar. 25, 2011 |
| SS & MORE PART 3 | Mar. 29, 2011 |
| SS & MORE PART 4 | Apr. 04, 2011 |
| SS & MORE PART 5 | Apr. 11, 2011 |
| SS & MORE PART 6 | Apr. 18, 2011 |
| SS & MORE PART 7 | Apr. 25, 2011 |
| SS & MORE PART 7A | Apr. 29, 2011 |
| SS & MORE PART 8 | May 02, 2011 |
| SS & MORE PART 9 | May 09, 2011 |
| SS & MORE PART 10 | May 16, 2011 |
| SS & MORE PART 11 | May 24, 2011 |
| SS & MORE PART 12 | Jun. 06, 2011 |
| SS & MORE PART 13 | Jun. 20, 2011 |
| SS & MORE PART 14 | July 05, 2011 |
| SS & MORE PART 14A | July 18, 2011 |
| SS & MORE PART 15 | July 19, 2011 |
| SS & MORE PART 16 | Aug. 03, 2011 |
| SS & MORE PART 17 | Aug. 15, 2011 |
| SS & MORE PART 18 | Aug. 29, 2011 |
| SS & MORE PART 19 | Sept. 12, 2011 |
| SS & MORE PART 20 | Sept. 26, 2011 |
| SS & MORE PART 21 | Oct. 10, 2011 |
| SS & MORE PART 22 | Oct. 24, 2011 |
| SS & MORE PART 22 EXTRA | Nov. 04, 2011 |
| SS & MORE PART 23 | Nov. 07, 2011 |
| SS & MORE PART 24 | Nov. 21, 2011 |
| SS & MORE PART 25 | Dec. 05, 2011 |
| SS & MORE PART 26 | Dec. 19, 2011 |
| SS & MORE PART 27 | JAN. 03, 2012 |
| SS & MORE PART 27A | JAN. 05, 2012 |
| SS & MORE PART 28 | JAN. 17, 2012 |
| SS & MORE PART 29 | JAN. 31, 2012 |
| SS & MORE PART 30 | Feb. 14, 2012 |
| SS & MORE PART CL1 | Feb. 21, 2012 |
| SS & MORE PART 30 EXTRA | Feb. 23, 2012 |
| SS & MORE PART 31 | Feb. 28, 2012 |
| SS & MORE PART CL2 - 59 | Mar. 06, 2012 |
| SS & MORE PART 31 EXTRA | Mar. 07, 2012 |
| SS & MORE PART 32 | Mar. 13, 2012 |
| SS & MORE PART CL3 - 1 | Mar. 20, 2012 |
| SS & MORE PART 32 EXTRA | Mar. 24, 2012 |
| SS & MORE PART 33 | Apr. 10, 2012 |
| SS & MORE PART CL 4 - 2 | Apr. 17, 2012 |
| SS & MORE PART 34 | Apr. 24, 2012 |
| SS & MORE PART CL5 - 49 | May 01, 2012 |
| SS & MORE PART 35 | May 09, 2012 |
| SS & MORE PART CL6 - 19 | May 15, 2012 |
| SS & MORE PART 35 EXTRA | May 18, 2012 |
| SS & MORE PART 36 | May 22, 2012 |
| SS & MORE PART 36 EXTRA | May 25, 2012 |
IN THIS ISSUE
1. Opening note.
2. JBMorgan Chase - - Break up the big banks.
3. How to fix the Federal Reserve and why it needs fixing.
~~~
"VOTE, AN EDUCATED VOTE"
What is an educated vote? It is one that has been made with as much knowledge, based on facts, not misinformation, that an individual can obtain.
~~~
OPENING NOTE.
THIS POSTING IS LONG, BUT REALLY IMPORTANT, CONSIDERING IT LAYS OUT WHAT CAUSED THE WORST RECESSION SINCE THE GREAT DEPRESSION AND SHOWS WHY WE AE ON A ROUTE THAT IS LEADING US RIGHT INTO ANOTHER BAD RECESSION, IF NOT A DEPRESSION.
I HAVE BEEN READING A LOT OF MATERIAL, LATELY, THAT HAS MADE ME FEEL WE WERE GOING TOWARDS ANOTHER RECESSION, BUT THESE TWO ARTICLES REALLY TELLS THE TRUTH IN A MANNER THAT CAN BE UNDERSTOOD. WITH THE EXCEPTION OF A FEW FINANCIAL JARGON WORDS, HERE AND THERE, THESE ARTICLES ARE EASY TO UNDERSTAND.
BOTH OF THESE ARTICLES ARE WRITTEN BY THE SAME PERSON. I HAVE FOUND HIM TO BE QUITE ACCURATE IN ALL THAT HE WRITES.
IF SOME CHANGES DON'T TAKE PLACE
Floyd
~~~
JPMorgan Chase: Break up the big banks now. Here's how.
by RICHARD (RJ) ESKOW
Campaign for America
Published Tuesday 22 May 2012
by The NationofChange
When Jamie Dimon revealed that JPMorgan Chase had lost billions through risky and legally questionable trading, he said the losses would be about $2 billion and maybe more. Apparently it is more - a lot more. People in a position to know are saying the real figure is probably in the $5-7 billion range.
The JPMorgan Chase scandal - and yes, it is a scandal - shows us why we need to break up the big banks as quickly as possible.
But that won't happen unless we can get our hands around the real scope of the problem, which is probably far greater than we're being told. That means cutting through the enveloping shroud of jargon, euphemisms and double talk - "crap," if you will - that keeps us from seeing the situation as it really is.
Here's why we need to do it, and here's how.
Talk, Talk :
Two images come to mind when considering too-big-to-fail banks like JPMorgan Chase: The first is of the gigantic spaceships hovering over all of the world's cities in Independence Day, leaving the citizenry in shadows and the world in fear and uncertainty.
The second image is of an old New Yorker cartoon which shows a husband and wife chatting with guests over drinks and h'ors d'oeuvres while an enormous monster scowls in the corner. The caption reads: "We deal with it by not talking about it."
Most politicians are either talking about tighter regulations for too-big-to-fail banks, or about the virtues of self-regulation and the so-called "free markets." But the real problem isn't how to manage too-big-to-fail banks, which are inherently unmanageable. The real problem is that they exist, an ever present menace that hovers over our economy while we go about our daily lives.
They deal with that problem by not talking about it.
Monster Mash
JPMorgan Chase is either our largest or second-largest bank, depending on when and how you ask the question. News stories often point out that it has $2 trillion in asset, which sounds impressive. But they usually fail to mention that it has liabilities of more than $2 trillion, too, leaving it roughly $183 billion in the black.
(I don't follow this at all. If you have $2 trillion and you owe $2 trillion, I don't see how you would have $183 billion left. However, I guess that isn't much when you are talking about trillions.) Floyd
That ain't bad - but it's not much more net worth than you'll see sitting around the table when Mitt Romney's Super PAC friends get together for lunch.
And we can't trust those numbers. We now know that these risky London
All of our big banks were on the hook for hundreds of trillions of dollars in the run-up to the financial crisis of 2008. And now they're bigger than ever. How big? We don't know for sure - and that's a big part of the problem.
Our four largest banks have 95 percent of the total exposure to derivatives. Two years ago we analyzed the raw data and found that JPM alone held 44 percent of that risk - and JPM has grown since then.
Because they intend to keep right on growing, as Jamie Dimon promised shareholders, “I want to assure you that your company will be bigger and stronger and better a year from today.”
If that doesn't frighten you, you haven't been paying attention.
Bigger ≠ Better
Here's an example of what we mean when we say it's time to "cut the crap" when we talk about big banks:
Writers should no longer be allowed to tell us, even in passing, that "I agree we need large institutions" unless they tell us why we need them.
Jamie Dimon was leading the chorus of bankers saying that their large size leads to increased efficiency and economies of scale. Okay, Mr. Dimon: Where are they? Is the cost of borrowing cheaper at JPM than it is at community banks? Are ATM fees lower? Are loans easier to get?
"Economies of scale" work well for customers - when you're manufacturing toasters. But banks like JPM aren't in the toaster business. They're not even in the customer business anymore. Ordinary clients at the big banks are like cannon fodder in a colonial army: They're there to be used and discarded, not to be served or respected.
So let's stop repeating the mantra that big institutions have anything to offer us - anything, that is, except moral hazard. We did fine without them for centuries, and we'll be better off once they're gone.
Gaming the Numbers
Here's something else that needs to stop: When a bank deceives its investors, reporters need to stop saying only that it "changed its risk model." That makes it sound arcane. What JPM really did was mislead everyone.
The bank told investors that they had begun assessing internal risk in a new and more effective way. But reports say that the unit which made these hazardous trades reported directly to Dimon, bypassing the bank's other executive and risk management channels. And despite what they told the public - include investors - the bank did not use its new risk model to assess these trades. They used an old model which dramatically understated the risk involved.
Listen, I know this kind of talk confuses some people, but if there's one thing I learned after working in risk management it's this: The more jargon you hear, the less trustworthy the source.
If reports are true, then Chase deceiving the public and it was deceiving investors. That's not "changing its risk model." It's lying. And it's very possibly fraud.
Byline Creep
And while we're in the crap-cutting business, here's something else that needs to stop:
Just because Jamie Dimon described the loss as "stupid" doesn't mean that you have to believe him, or use the same language. Listen, writers: He's the architect of this charade, not an observer.
If this disaster should tell you anything, it's to stop letting Jamie Dimon write your copy for you.
Something Stupid
Executives at Chase and the other big banks live in confidence that they'll reap the profits for risky betting and leave the losses to you. That may be many things - venal, selfish, greedy - but it's not stupid.
What's more, as long as nobody is indicted for Wall Street's ongoing criminality, they can keep breaking the law knowing they'll never pay the price for that either.
And if laws were broken in JPMorgan Chase's case, as Dimon himself acknowledges is possible, then these deals were only "stupid" the way any crime is stupid: It's only stupid if you get caught.
It Can Be Done. Here's How.
We've been led to believe that it's politically and economically impossible to break up these banks. That's not true. How can the political climate be changed?
The first step is to push for better financial reporting, so that we see less of the mistakes described above. If people are better informed about big banks, sentiment against them will run even stronger than it is right now.
Which gets us to the politics of big banks.
Democracy First
The common-sense SAFE Act introduced by Sen. Sherrod Brown and Rep. Keith Ellison would end the era of too big to fail. It's a smart first step toward ridding the world of these menaces to society.
Legislation should also be introduced to strengthen and expand antitrust laws so that they can rein in out-of-control banks like JPM.
True, the SAFE Act and antitrust banking bills are unlikely to pass under our corrupt political system. But every politician in Washington
During the drafting of Dodd/Frank financial legislation we saw something important happen a number of times: If politicians were allowed to craft deals in private, those deals always benefited the big banks. But if they were forced to debate these issues publicly, we saw a much greater consensus against Wall Street.
Public debate: It's how democracy is supposed to work. It will help us break up the big banks.
Contraptions and Elegance
The Dodd/Frank bill's reforms, while anemic, are somewhat useful. It's madness to suggest repealing them, as Republicans are trying to do. But Dodd/Frank isn't useful at all unless agencies are staffed with regulators determined to do their jobs. The Administration's record has been lackluster (or worse) in that regard, while the Republicans have made it clear that they'll staff regulatory agencies with people determined not to do their jobs.
It doesn't help that when it comes to too-big-to-fail banks the current system of financial regulation is a rickety, complicated, Rube Goldberg-ish contraption designed to work around the massive danger that they pose to the economy.
Simple solutions are usually the best, and the simple solution to too big to fail banks is: Break them up.
That may not be politically feasible right now, but it's the job of a mobilized citizenry to change the political equation with public pressure whenever possible. That means keeping the issue on the front burner by inundating elected officials from the White House on down with emails and calls in support of the SAFE Act.
Lead the Fed
The public needs to pres Congress about the Federal Reserve, too. The Fed is feeding the growth of the megabanks with free or very low-interest money, no strings attached. That gives megabanks the resources and the incentive to place that where it can maximize income in a stagnant, nearly consumerless economy. That tempts the banks into increasingly risky transactions and instruments like the ones that caused JPM's loss.
The Fed must also stop interfering with shareholder democracy, which cuts to the core of executive accountability. We should demand that Congress hold the Fed accountable for its actions in propping up too-big-to-fail banks.
That's not very likely to happen as long as the Federal Reserve, a creation of the United States government, is governed by boards that are dominated by bankers - bankers like Jamie Dimon. So the public must demand that Dimon step down, and that bankers are removed from Fed boards altogether.
Shine a Light
The public has the right to know about the banks it's been coddling, spoon-feeding low interest loans to, and protecting for years. It should demand a full and complete audit of these banks by trustworthy outsiders - if enough of them can still be found. Auditors can provide the banks with all the proprietary protections they rightfully deserve. But we rescued them, and now we need to shine a light into their dark corners.
In addition to these general audits, we also need an immediate, extensive and transparent, no-holds-barred, review of the JPMorgan Chase debacle. Simon Johnson compares this event with the near-collision of two jet airliners, which would trigger an immediate investigation by the National Traffic Safety Board. It's an apt analogy, and an excellent idea.
And bank executives must be investigated, too - for criminal activity. That, and that alone, would discourage illegal risk-taking. It would also make them take their legal responsibilities under Sarbanes-Oxley much more seriously than they apparently do today, and would discourage them from routinely deceiving the public - which in many cases appears to cross the line into fraud.
Declare Independence
Our national and world economies are in grave danger as long as banks like JPMorgan Chase exist in their present form. They've already left our economy in ruins once. It's only a matter of time before they do it again.
Even if we assume that JPM's current problems can be contained, we should realize that every loss of this kind has the potential to turn into a chain reaction. Each could become a cascading failure that threatens JPM or another megabank -- and which therefore threatens the entire financial system.
The megabanks pose an existential threat to our economy. They hover over our economy, our political system, and our personal lives like a fleet of giant spaceships. They serve no useful social purpose, and they only exist because we allow them to exist.
it's time to declare our independence from their domination and demand that our elected officials help us in our fight for freedom. It's time to stop living in their menacing shadow and come out into the sunlight.
It's time to dedicate ourselves to breaking up JPMorgan Chase and the other too-big-to-fail banks, and to ensuring that they never threaten the world's economy again.
It's my recollection, that Wall Street was the cause of the Great Depression. There is no question that Wall Street and the Big Banks are the ones that have caused the worst recession since the Great Depression. Floyd
~~~
Richard (RJ) Eskow
Published: Friday 25 May 2012
by NationofChange
More and more people are calling for Jamie Dimon, CEO of JPMorgan Chase, to resign from the Board of the New York
His latest scandal, combined with Dimon's hypocrisy and relentless self-promotion, make him an obvious target. But Dimon isn't alone. Bankers dominate the Fed at the regional and national levels, and most of the other outside seats are held by executives from large corporations. (Remember Herman Cain?)
Should Dimon resign? They all should.
The Board Member With No Name
The scary thing is that Dimon may not be the Fed's most inappropriate board member. That honor may belong to the individual I call the Board Member With No Name. (I don't want to inflame the situation by identifying her, and what she represents is more important than who she is.)
Shouldn't a résumé that includes being the top bank lobbyist and working for the firm that laundered a third of a billion dollars for Mexican drug cartels disqualify someone from serving at the Fed?
Before she became the banking industry's chief lobbyist, the Board Member With No Name was an executive at scandal-plagued Wachovia Bank, an institution whose egregious mismanagement led to its collapse and a government rescue. Wachovia's many scandals and crimes included: deceptively packaging its toxic subprime mortgage backed securities; rigging municipal bond bids, which led to a$148 million fine; and, worst of all, laundering $378 billion in drug money for the Mexican cartels that have murdered at least 60,000 people.
The legislators who passed the Federal Reserve Act of 1913 couldn't have imagined that someday one of its governors would come from a firm that was buste,d when its laundered money was used to buy a drug-smuggling plane in Sinaloa.
Banks are large organizations, and it's unlikely that the Board Member even knew about the wrongdoing. She looks like a very nice person - and she probably is. But her background hardly qualifies her for a position of public trust. After all, she's only two or three degrees of Kevin Bacon away from cartel bosses like "El Loco," who leads a group of deserters from the Mexican Army's Special Forces known as "Los Zetas."
Coincidentally, El Loco was arrested this week for beheading 49 people and dumping their bodies in the town square.
The drug cartels have been called "vicious," "evil," and "sociopathic." At Wachovia they were also called "preferred clients."
Conflicted
The New York
The Richmond Fed's bank representatives include the leaders of First Citizens Bancshares and CommerceFirst bank, as well as the managing partner of a Charleston Seattle
And so it goes ...
Other banks and corporations represented at the regional or branch level include Bank of America, Boyd Gaming, Shorenstein Properties, Dow Chemical, Nissan, AutoNation, USAA, IBM, Southwest, JC Penney, USG, Nissan, along with energy and lumber companies and some of the legal and accounting firms that serve the country's megabanks.
Of nearly 250 Board members for the Fed's regions and branches, I was able to identify only three union representatives (from the AFL-CIO), one or two pension fund representatives (pension funds have been robbed blind by the big banks), and one member of a housing coalition. The Fed's boards have become more exclusive than a country club - and a lot more powerful.
Federal Case
Why do we even have a Federal Reserve? There are people - mostly libertarians of the Ron Paul school - who think it should be abolished. They're wrong. We need a central bank. The financial crises which peppered our early history proved the need for a secure dollar backed by the "full faith and credit" of the United States
Panics like the one that led to William Jennings Bryan
So the question isn't whether we need a central bank: We do. The question is, Why is it dominated by the people who have already ruined the economy once - and who have a clear conflict of interest?
The World's Biggest ATM
Give a bunch of bankers access to the world's biggest ATM and look what happens: As Bloomberg News reported last August, "Wall Street's aristocracy got $1.2 trillion in secret loans" from the Federal Reserve.
What the Federal Reserve hasn't done is carry out its mission, which the Fed's own "Purposes and Functions" document describes as:
· Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates,
· Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
· Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
· Providing financial services to depository institutions, the U.S.
When it comes to that last bullet point the Fed's knocked it out of the park, especially for the banks. The other goals? Not so much.
Scoring the Fed
Let's rate the Federal Reserve according to the parameters it set out for itself:
· "Maximum employment": Thanks to the Fed, banks have had access to free or very-low-cost money, which they've used to make money on Treasuries and other safe investments. But they haven't been lending it to the consumers and small businesses who are the engines of job growth.
· "Stable prices": Gas prices keep swinging up and down radically because of speculation.
· "Moderate long-term interest rates": Yes - but is that good?
Opinions vary.
· "Safety and soundness of the nation's banking and financial system": JPMorgan Chase's recent debacle shows how little the Fed has accomplished here. but then, how easy can it be to rein in Jamie Dimon when he's chairing the meeting?
· "Protect the credit rights of consumers": Massive mortgage fraud by major banks. One settlement after another for deceiving consumers. How much time do you have?
· "Maintaining stability ... containing systemic risk": JPMorgan Chase's latest debacle settles this issue once and for all ...
... By any objective measurement, the Federal Reserve has failed to do meet these key objectives, and the composition of its boards is one of the reasons why.
The Radical Fed
Is it any wonder that the Fed gave out more than a trillion dollars to Wall Street's biggest banks - and did it in secret? (That alone would appear to violate securities law, since it allowed bankers like Jamie Dimon to materially misrepresent the financial condition of their corporations.
And that's not all the newly radicalized Fed has done. It broke the rules by allowing Goldman Sachs and GE Capital to call themselves "banks" - just in time to collect their taxpayer-funded bailouts. But it hasn't shown any flexibility when it comes to demanding that banks use some of their low-interest Fed loans to lend to the people and companies that will use it to create jobs.
The Fed has even broken its own rules in order to protect bad bankers. As Prof. Steven Davidoff noted in the New York Times: "In Blocking Activists, the Fed Protects Poorly Performing Banks." It's also protecting poorly performers bankers - like the ones that sit on its boards.
In one case the Fed blocked a shareholder action by invoking a rule which said an outside party couldn't have more than 25 percent control of a bank - but the shareholder would only have acquired 22 percent control. As Davidoff documents, Fed is repeatedly bending or violating its own rules to prevent shareholders from exercising their rights to limit executive compensation or take action against underperforming or ethically-challenged executives.
The Fed has changed the playbook for bankers over and over. But whenever someone suggests imaginative programs to stimulate the economy by helping consumers or small businesses the Fed suddenly decides it's a stickler for the rules.
Resistance Is Futile
In our interview for The Breakdown last week, Paul Krugman reiterated his statement that his former Princeton colleague Ben Bernanke has "joined the Borg." The "Borg" is the collective alien entity from Star Trek that takes over people's identities and leaves them with no other mission but expanding its own power.
These Federal Reserve boards represent the Corporate Borg in all its unchecked power - but the power they possess is power that we have given them, through our elected representatives.
It doesn't have to be this way. There are good folks on the Committee, like Janet Yellen, Sarah Bloom Raskin and Daniel Tarullo.
But they're the exceptions, not the rule.
Enter Sanders
That's why Sen. Bernie Sanders' Federal Reserve Independence
The bill follows on the Federal Reserve Transparency Act, which was cosponsored by Sen. Bernie Sanders and Rep. Ron Paul. That bill demanded a public audit of the Fed, which is how we learned about those massive secret loans. That act showed that the left and the right can work together to change our broken central banking system.
It's time to reunite that left/right coalition. Ron Paul may be wrong about the need for a central bank, but he's right when he says that the Fed must be accountable to the people.
Dissing Dimon
Which gets us back to Jamie Dimon. When the prominent economist Simon Johnson first demanded Dimon's resignation he noted that, while his role is sometimes described as "advisory," Dimon sits on the Management and Budget Committee which supervises the pay of senior Fed executives.
That committee also approves the self-evaluation of senior Fed executives - which essentially means it gives them their performance reviews. It reviews and approves the Fed's overall budget, too, including the budget for auditing bankers like Jamie Dimon. According the Fed itself, its other main responsibility is to "review and endorse the Bank's strategic plan."
Budget, compensation, strategic planning: That pretty much covers everything.
Johnson's call for Dimon's resignation has been joined by Elizabeth Warren and the American Constitution Society for Law and Policy, which calls Dimon's position "a stunning conflict of interest."
They're right, of course. But in saner times people would also be demanding that Dimon resign from his bank, too. His tenure as CEO has been marked by a wave of massive deals to settle criminal and civil charges. That alone would have led to disgrace and resignation in more civilized times.
Even in today's more mercenary atmosphere, Dimon's nothing to write home about: The stock was worth around $40 when he became CEO in 2005 and never rose much above $50 after that. It was $33.78 after this latest fiasco.
Dismissing Dimon
From his perch on the New York
It's like the old saying goes - a billion here, a billion there, and pretty soon you're talking about real money.
Dimon's always been a paper tiger, a product of his own PR campaign and the low standards of his profession. If he won't resign as JPM's CEO, he should certainly resign as its Board Chairman, a title he assumed in 2006. That's another clear conflict.
An ethically-managed Federal Reserve wouldn't wait for Dimon to resolve this internal conflict by giving up one of these roles. It would have demanded it long ago. And it would have dismissed Dimon from its Board for JPMorgan Chase's past scandals, as well as the one that just came to light.
And now for something completely different ...
It seems like something out of a Monty Python routine. The boards that govern the Federal Reserve, the publicly-created central bank that dispenses money to bankers, are all dominated by ... the bankers who receive that money. Picture it if you can:
Fed Board room, 2008:
ECONOMIST: This is serious! The global economy is collapsing because of your reckless gambling!
LONE CITIZEN BOARD MEMBER: That is serious. What can we do? We could break up our banks and fire their executives, or ...
BANKER: Wait! I've got it! Give us more money!
(Nods all around the table)
Six months later:
ECONOMIST: This is serious! We've given you money but you're not lending it out to get the economy moving!
LONE CITIZEN BOARD MEMBER: That is serious. What can we do? Perhaps there could be rules and conditions about lending that ...
BANKER: Or they could give us more money!
OTHER BANKERS: Good one! Let's go with that!
Three years later:
ECONOMIST: This is serious! Joblessness is still at record highs. Poverty has soard. Too-big-to-fail banks are bigger than ever. And you guys are still breaking the law and skirting the rules.
LONE CITIZEN BOARD MEMBER: Hmm. That is serious. The Fed could use its regulatory authority to ...
BANKER: (aside) I hate that guy. (to all) Let me see ... hmmm ... how about giving us more money?
Three and a half years later:
ECONOMIST: This is serious! The country -
BANKERS (in unison): More money!
Clean Up the Boards
The Federal Reserve's governing structure isn't quite that bad - but it's pretty close. As the President of the Kansas City
We'll go a step further: The public's trust can no longer be given to a central bank whose governing bodies are dominated by the wealthy and powerful. Bankers and large corporations should be asked to provide information to the Fed, and should be encouraged to offer their advice. But they don't belong on its boards or committees.
Other steps are needed to make the Federal Reserve responsive the people who created it and gave it such power. But the composition of its boards is a key part of its problem. Its an impediment to change and a disgrace to the nation. As Simon Johnson told an interviewer recently, "No other central bank in any serious country in the world allows bankers to be represented in this fashion."
It's time to boot the bankers from the Federal Reserve's boards and those seats to people who will work on behalf of the citizenry which created the Fed in the first place.
1 comments on "How to Fix the Fed: Dismiss Dimon, Boot the Bankers, and Can the Corporations"
May 25, 2012 11:39am
What we should have done long ago, is abolished the Federal Reserve altogether and put the power of the purse back into the hands of the US Treasury, where it should have stayed all along. JFK was the last President to try to restore America's Constitutional guidelines for handling the dispensing of our National Currency, and look at where it got him. These bankers are powerful, and they are getting more powerful everyday. At least, finally, the people are beginning to put two and two together and see the ties between JP Morgan and the Federal Reserve (not that JP Morgan is the only bank involved directly with the Fed). I hope this is the beginning of the end of the Federal Reserve ... finally. I'm not holding my breath, though.
~~~
If the good Lord is willing and the creek don't rise, I'll talk with you again with another EXTRA in two or three days.
Floyd
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