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Taco John
06-03-2009, 12:19 AM
Handwritten Notes Show Fed Oversight Bill Neutered On Senate Floor

Legislation to give Congress greater oversight of the Federal Reserve was severely watered down on the Senate floor Wednesday in private negotiations between two powerful Republican senators.

Thanks to an overlooked document posted on the website of Sen. Charles Grassley of Iowa, the top ranking Republican on the Finance Committee, voters can virtually watch the water being dumped into the brew that Grassley had hoped to force the Fed to drink. (See the document at the bottom of this story.)

On page five of Grassley's amendment, he intends to give the Comptroller General of the Government Accountability Office power to audit "any action taken by the Board under...the third undesignated paragraph of section 13 of the Federal Reserve Act" -- which would be almost everything that it has done on an emergency basis to address the financial crisis, encompassing its massive expansion of opaque buying and lending.

Handwritten into the margins, however, is the amendment that watered it down: "with respect to a single and specific partnership or corporation." With that qualification, the Senate severely limited the scope of the oversight.

On the Senate floor, Grassley named the top Republican on the banking committee, Richard Shelby of Alabama, as the man pouring the water.

"Although I would have preferred to include all of the Fed's emergency actions under 13(3), in consultation with Senator Shelby I agreed to limit my amendment to actions aimed at specific companies," said Grassley.

"This modified version of the amendment does not give GAO authority to look at all of that additional taxpayer risk. It is much narrower than the one I originally filed, but it is a reasonable step in the right direction, and it does not threaten monetary policy independence."

The original version of the amendment also scratches out congressional authority to oversee Fed actions as they relate to the TARP bailout or "similar authority that the Board exercises under urgent and exigent circumstances." The Senate walked right up to the edge, thought about auditing the Fed, and with the stroke of a pen, backed off. (Or maybe it was a pencil.)

The action the Senate took, however, is not meaningless.

Grassley entered into the congressional record a list of Fed actions that do fall within the limits of the language in his amendment (which could still be eliminated in conference committee negotiations):


1. Actions related to Bear Stearns and its acquisition by JP Morgan Chase, including:

a. Loan To Facilitate the Acquisition of The Bear Stearns Companies, Inc. by JPMorgan Chase & Co. (Maiden Lane I)

b. Bridge Loan to The Bear Stearns Companies Inc. Through JPMorgan Chase Bank, N.A.

2. Bank of America -- Authorization to Provide Residual Financing to Bank of America Corporation Relating to a Designated Asset Pool (taken in conjunction with FDIC and Treasury)

3. Citigroup -- Authorization to Provide Residual Financing to Citigroup, Inc., for a Designated Asset Pool (taken in conjunction with FDIC and Treasury)

4. Various actions to stabilize American International Group (AIG), including a revolving line of credit provided by the Federal Reserve as well as several credit facilities (listed below). AIG has also received equity from Treasury, through the TARP, which would also be captured in amendment #1020.

a. Secured Credit Facility Authorized for American International Group, Inc., on September 16, 2008

b. Restructuring of the Government's Financial Support to American International Group, Inc., on November 10, 2008 (Maiden Lane II and Maiden Lane III)

c. Restructuring of the Government's Financial Support to American International Group, Inc., on March 2, 2009

5. TALF -- finally, amendment #1020 would expand GAO's authority to oversee the TARP, including the joint Federal Reserve-Treasury Term Asset-Backed Securities Loan Facility (TALF)

*Neither* Amendment #1021 nor #1020 would include short-term liquidity facilities:

1. Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility
2. (AMLF)
3. Commercial Paper Funding Facility (CPFF)
4. Money Market Investor Funding Facility (MMIFF)
5. Primary Dealer Credit Facility and Other Credit for Broker-Dealers (PDCF)
6. Term Securities Lending Facility (TSLF)

KILLER_CLOWN
06-03-2009, 01:04 AM
This is a major setback, i was hoping this would move forward.

BucEyedPea
06-03-2009, 07:06 AM
Richard Shelby of Alabama=probably in the pocket of banking industry.

I read Kucinich also has a similar bill going.

KILLER_CLOWN
06-03-2009, 08:35 AM
Richard Shelby of Alabama=probably in the pocket of banking industry.

I read Kucinich also has a similar bill going.

No surprise there, Kucinich and Paul are the only 2 that work for the people.

Dave Lane
06-03-2009, 08:57 AM
I know Shelby. Met him and talked with him a lot. He is a major piece of work. He told me some funny stories though off the record kinda made my skin crawl and made me queasy all in one step. Really, really gained a lot of insight into how the congress actually works after a couple hours of stories. Course he was a Democrat then :)

petegz28
06-03-2009, 09:00 AM
This is BS.....the Federal Reserve is one of the biggest problems with this country.

BigChiefFan
06-03-2009, 10:14 AM
Time to start bombarding my local congressman with e-mails and phone calls. This is bullshit.

petegz28
06-03-2009, 11:02 AM
I am watching Bernanke testify right now and when he was asked about a contract the Fed signed with Blackrock he gave the standard "I don't think that is correct".

This is exactly why the Federal Reserve needs to be audited.

wild1
06-03-2009, 12:16 PM
the republicans currently in congress are (in large part) just debris from what is going to be a dark period in washington. hopefully most of these pansies who lack the will to even put up a fight are swept out and replaced.

Mr. Flopnuts
06-03-2009, 12:20 PM
We need to fire The Fed. Period.

BigChiefFan
06-03-2009, 12:22 PM
We need to fire The Fed. Period.

You can't fire what was never a government entity.:hmmm:

Calcountry
06-03-2009, 02:56 PM
Richard Shelby of Alabama=probably in the pocket of banking industry.

I read Kucinich also has a similar bill going.Shelby is the Democrat version of Arlen Spectre.

Calcountry
06-03-2009, 02:59 PM
We need to fire The Fed. Period.What would Mr. Rothchild have to say about that?

Stewie
06-03-2009, 03:05 PM
Is this a surprise? They don't want to show their books. It would cause the truth to be told all at once. They'd rather give inforomation piecemeal so there's not a riot.

googlegoogle
06-03-2009, 04:32 PM
Someone explain how Richard Shelby can water a bill down when Democrats have majority rule in Senate.

BucEyedPea
06-03-2009, 05:51 PM
Someone explain how Richard Shelby can water a bill down when Democrats have majority rule in Senate.

He's really still a Democrat. That's how.

Calcountry
06-03-2009, 06:29 PM
He's really still a Democrat. That's how.We have an Oligarchy masquerading as 2 party rule.

They keep the rah rah tools like Canibal and BRC off guard because they are happy just because their side won while they sell the country down the river.

We are going to need some of you Democrats, who love your country more than your party to step up to save the country from this maniac. If nothing else, we need to slow him down with a vigorous debate in the Senate.

BucEyedPea
06-03-2009, 06:42 PM
You can't fire what was never a government entity.:hmmm:

You can if it was created by govt as a monopoly. Just abolish it by law the way it was started.

Then you'd have statist's like banyon who'd want a govt Bank of United States which would lead to the same problems. Worse perhaps.

BigChiefFan
06-03-2009, 07:10 PM
We already have a treasury, we should use it.

Mr. Flopnuts
06-03-2009, 07:27 PM
Is this a surprise? They don't want to show their books. It would cause the truth to be told all at once. They'd rather give inforomation piecemeal so there's not a riot.

Well, it's not our money so it's none of our business. Don't believe me? Just ask them.

Nightfyre
06-03-2009, 08:25 PM
I noticed Ben Bernanke today implied that fiscal policy will create inflation in the near-future but that he projected that the rates needed to stay low for a prolonged period of time. The hypocrisy kills me. Does Bernanke know what's going on?