Posted Mar 6, 2015 by Martin Armstrong
Senator Elizabeth Warren is leading the charge against the Federal Reserve being too close to the bankers in a Hearing on Fed Accountability and Reform in the Senate. This week, the Senate Banking Committee held the first of its hearings on widespread demands to reform the Federal Reserve to make it more transparent and accountable. What will take down the Fed is its manipulation by the Wall Street Money-Center Banks.
This is the mirror image of what is going on in London. But will it gain traction? It seems it is just a touch premature. Hold this AFTER 2015.75 and the other politicians taking contributions from the bankers will have no place to hide. Both Jeb and Hillary are courting Goldman Sachs who will hand both tons of cash buying both sides of the isle.
Senator Elizabeth Warren is putting her finger on the pulse of a growing public outrage over how the Federal Reserve conducts much of its operations in secret and is in bed with the Wall Street bankers succumbing to their every desire. Warren harped on the secret loans that the Fed made to Wall Street during the financial crisis as follows which illustrates my point – they may try to manipulate markets in search of that risk free trade, but they always fail and have the government backing them up each time. Warren began:
“During the financial crisis, Congress bailed out the big banks with hundreds of billions of dollars in taxpayer money; and that’s a lot of money. But the biggest money for the biggest banks was never voted on by Congress. Instead, between 2007 and 2009, the Fed provided over $13 trillion in emergency lending to just a handful of large financial institutions. That’s nearly 20 times the amount authorized in the TARP bailout.
“Now, let’s be clear, those Fed loans were a bailout too. Nearly all the money went to too-big-to-fail institutions. For example, in one emergency lending program, the Fed put out $9 trillion and over two-thirds of the money went to just three institutions: Citigroup, Morgan Stanley and Merrill Lynch.
“Those loans were made available at rock bottom interest rates – in many cases under 1 percent. And the loans could be continuously rolled over so they were effectively available for an average of about two years.”
The gist of the reasoning for the Fed to keep things quiet was the little known fact that Citigroup, advised by former Goldman Sachs CEO Robert Rubin, was insolvent during the period it was receiving loans from the Fed. You just can’t make up this stuff.
The growing distrust of the Fed being in bed with Wall Street money-center banks is behind the hearings especially after the repeal of Dodd-Frank in December. During Federal Reserve Chair Janet Yellen’s appearance before the Senate Banking Committee a week earlier, Senator Warren severely criticized the actions of Scott Alvarez, the General Counsel of the Federal Reserve. Warren blasted Alvarez’s role and how he had delivered a speech before the American Bar Association challenging Dodd-Frank’s so-called push-out rule that would bar insured depository banks from holding dangerous derivatives and swaps on their books. Right after that, in an amazing coincidence, thereafter, Citigroup lead the repeal of the provision into the must-pass spending bill that would keep the government running through this September.
Warren highlighted that the Dodd-Frank legislation was passed in 2010 and the Federal Reserve had stalled any implementation of the push-out rule until 2016. The fed wanted to give the bankers whatever they asked for which was to help Citigroup in particular to make back money trading and for it to lead the charge to eventually have it repealed, which it has now accomplished.
Ironically, in 1910, Senator Aldrich met with Frank Vanderlip of National City Bank (Citibank), Henry Davison of Morgan Bank, and Paul Warburg of the Kuhn, Loeb Investment House secretly at Jekyll Island, a resort island off the coast of Georgia, to discuss and formulate banking reform, including plans for a form of central banking that would accomplish the role of J.P. Morgan played during the Panic of 1907. So Citibank (now Citigroup) has been at the center of the game from the beginning.
Warren also revealed that Alvarez was stonewalling her office in making his findings public on his investigation into a leak of information from a September 2012 Federal Open Market Committee (FOMC) meeting. Warren highlighted that the Wall Street banking firms can make significant profits trading on leaked FOMC information ahead of public disclosure. Warren said the public was still waiting two and a half years later for Alvarez to disclose the details of what occurred. It is clear, the Fed is manipulated by the Wall Street Money-Center banks. This is becoming more exposed and eventually will lead to the fall of the Wall Street bankers.