There has been a lot of talk in the news recently about the Federal Reserve and the actions it has taken over the past few months. Many media pundits have been bending over backwards to praise the Fed for supposedly restoring stability to the market. This interpretation of the Fed’s actions couldn’t be further from the truth.
The current market crisis began because of Federal Reserve monetary policy during the early 2000s in which the Fed lowered the interest rate to a below-market rate. The artificially low rates led to overinvestment in housing and other malinvestments. When the first indications of market trouble began back in August of 2007, instead of holding back and allowing bad decision-makers to suffer the consequences of their actions, the Federal Reserve took aggressive, inflationary action to ensure that large Wall Street firms would not lose money. It began by lowering the discount rates, the rates of interest charged to banks who borrow directly from the Fed, and lengthening the terms of such loans. This eliminated much of the stigma from discount window borrowing and enabled troubled banks to come to the Fed directly for funding, pay only a slightly higher interest rate but also secure these loans for a period longer than just overnight. Continue reading »
Tags: Banking, Bubble, Commodities, Fed, Federal Reserve, investment, monetary policy, Ron Paul, Taxpayers, Treasury Department, Wall Street
“The Fed would have the authority to go wherever in the system it thinks it needs to go for a deeper look to preserve stability,” Mr. Paulson said in the advance text of Monday’s speech. “To do this effectively, it will collect information from commercial banks, investment banks, insurance companies, hedge funds, commodity pool operators.”
WASHINGTON – The Treasury Department will propose on Monday that Congress give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.
The proposal is part of a sweeping blueprint to overhaul the nation’s hodgepodge of financial regulatory agencies, which many experts say failed to recognize rampant excesses in mortgage lending until after they set off what is now the worst financial calamity in decades. Continue reading »
Tags: Commodities, Fed, Hedge Funds, insurance companies, investment bank, Power, Treasury, Treasury Department, Wall Street
The National Counterterrorism Center (NCTC) in Virginia. the NCTC has elements of the FBI and CIA where terrorism-related information is
shared on a real-time basis.
Christopher Morris / VII for TIME
Pity America’s poor civil libertarians. In recent weeks, the papers have been full of stories about the warehousing of information on Americans by the National Security Agency, the interception of financial information by the CIA, the stripping of authority from a civilian intelligence oversight board by the White House, and the compilation of suspicious activity reports from banks by the Treasury Department. On Thursday, Justice Department Inspector General Glenn Fine released a report documenting continuing misuse of Patriot Act powers by the FBI. And to judge from the reaction in the country, nobody cares. Continue reading »
Tags: ACLU, American Civil Liberties Union, Big Brother, FBI, Foreign Intelligence Surveillance Act, libertarians, NSA, Patriot Act, Treasury Department, White House