Friday, August 28, 2009

Trick or Treat Helicopter Ben!

Fast on the heels of Bloomberg's lawsuit against the Federal Reserve to disclose the failing entities to which it lended vast amounts of money, now comes word of when we can expect to see HR 1207, Ron Paul's bill to Audit the Federal Reserve, hit the floor of the House. When I first wrote about this bill and why it is so important in late April, urging people to get on board and contact their representatives, the bill had 91 co-sponsors, and stood alone as the first effort in tackling the Fed. A mere four months later, HR 1207 now enjoys 282 co-sponsors, and it's companion bill in the Senate, S 604, has attracted 23 co-sponsors.

Meanwhile, responding to the Judge Preska's verdict in US District Court, the Fed is hapless:

Fed lawyer Kit Wheatley told Preska in a conference call today that she did not know how long it would take for the Fed board to search the New York Fed for records.

“We really don’t know what’s in New York,” Wheatley said. “We don’t control the system of record-keeping in New York.”

The Standard

The Fed’s lawyer went on to say that she did not know what records would fall under a “delegated function,” which would be a task assigned to the New York Fed.

Preska interrupted Wheatley, saying that “Ms. Wheatley, I held that’s not the standard. You didn’t search under the regulation. You’re supposed to search under the regulation.”

While their bumbling lawyers stumble about searching for ways to continue to allow the organization to operate in the shadows, other representatives of the Federal Reserve offer nothing but excuses as defense for their existence.
“Experience in the banking industry has shown that when customers and market participants hear negative rumors about a bank, negative consequences inevitably flow,” Norman Nelson, vice president and general counsel for the group, said in the document.
You don't say, Norman? You mean to tell us that when businesses factually and functionally operate as failures, there are negative consequences? We are not talking about rumors here. We are talking about institutions receiving funds from the Fed for the purpose of even remaining in business at all. They made decisions that the free market dictated should end their businesses, and the Fed gave them the money to stay alive, whether they could show a capacity to be a profitable business venture in the future or not. The Fed did this by increasing the money supply, staging the market for de facto inflation, thus devaluing everyone's money. To save businesses they very likely should not have been saved, the Fed robbed us all. This is why this is public interest.

“Our argument is that the public interest in disclosure outweighs the banks’ interest in secrecy,” said Thomas Golden, a lawyer with New York-based Willkie Farr & Gallagher LLP who represents Bloomberg.

Preska’s Aug. 24 ruling rejected the Fed’s argument that the records should remain private because they are trade secrets and would scare customers into pulling their deposits.

“What has the Fed got to hide?” said Senator Bernie Sanders, a Vermont independent who sponsored a bill to require the Fed to submit to an audit by the Government Accountability Office. “The time has come for the Fed to stop stonewalling and hand this information over to the public,” he said in an e- mail.

Rest assured, the Federal Reserve will be appealing the ruling. But no matter what, time is most definitely not on its side. For even if the Fed can manage to delay disclosing these records due to court order, it appears to be merely a matter of time until they must disclose all of their transactions as a matter of law. In fact, given Barney Frank's recent meeting below (HT: BTB), the idea of trick-or-treating as Helicopter Ben might not seem so far fetched.

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