Tuesday, September 17, 2013

*Update* Federal Reserve Janet Yellen and Obama’s Mama Problem

The Federal Reserve Bank’s 100 year charter is scheduled to expire in December 2013.  First of all, what kind of stupid is that?  What country would agree to a 100 year charter with a private bank to print their currency, charge them interest to print their currency, control their monetary policy and refuse to allow the government to audit their books?  Answer, the United States of America.  Kind of gives new meaning to how “exceptional” we are.

In 1907 Wall Street speculation triggered a severe banking panic and moneyed interests in eastern cities used the panic they created to float the idea of a central bank.

Thomas Jefferson warned America about a central bank.

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Wow, it’s as though Jefferson had a peephole to look through to see the United States in 2013.  An interesting thing about Jefferson’s quote is that since the Federal Reserve was first chartered the value to the dollar has declined enormously.

On December 23, 1913, the Federal Reserve Act, also known as the Glass-Owen Bill, was passed. The Republican controlled Senate rammed the bill through when many members of the US Congress were home for the holiday. The President, Dr. Thomas Woodrow Wilson, signed it into law one hour after being passed by the Congress.

God, try to absorb that.  A handful of Republican Senators rammed through the Federal Reserve act of 1913 to give a 100 year charter to a central bank to print and control the currency of a sovereign country and one hour later the President signed it into law.  That is so breathtaking it’s staggering.

The Federal Reserve System is an independent central bank. Although the President of the United States appoints the chairman of the Fed, and this appointment is approved by the United States Senate, the decisions of the Fed do not have to be ratified by the President, or anyone else in the executive branch of the United States government.

Well, I guess as long as the Federal Reserve Bank can control who the President is they can make sure the policies of the Fed will ensure endless profits for the privately owned central bank.

The thing is that the Federal Reserve has two main purposes.  1.  Price Stability and 2.  Full Employment.  Since the repeal of Glass-Steagall it appears the Federal Reserve doesn’t give a rip about either.  After Dodd Frank, they now are supposed to be in charge of financial stability systems risk.  That’s if it is OK with them.   

The Glass-Steagall Act of 1933 was a depression era law that prevented commercial banks from trading securities with their clients’ deposits and the FDIC (Federal Deposit Insurance Corporation) was established to ensure people’s deposits from Bank default. 

During 1999, the banks found it cumbersome to only be able to make money off loans that they had the capital to back, and use those funds to invest in the Stock Market.  After the repeal of Glass-Steagall in 1999, they were able to issue loans, package those loans and sell them off to investors and take the cash to the craps table on Wall Street with a government guarantee that if they lost money the United States Treasury would not only cover their losses but would pay out promised bonuses to the top gamblers.

Elizabeth Warren, a Harvard Law Professor, came up with an idea to protect consumers from these high stakes gamblers using their 401K savings, mortgages, student loans, municipal bonds, etc. to feed their addiction.

Warren created the Consumer Financial Protection Bureau, an independent federal agency that holds primary responsibility for regulating consumer protection with regard to financial products and services in the United States.  It is a simple, guarantee that consumers understand the financial products and the risks of those products that banks offer.

Well, it was déjà vu all over again.  Republicans violently opposed any consumer protections from banks and many, many Democrats that have been bought off by the banks agreed.  It took Herculean courage and tenacity, but Warren prevailed and the CFPB was passed. 

“The jurisdiction of the bureau includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies as its most pressing concerns.”

Ha, ha.  Any financial products that have a high risk of screwing the American people out of their hard earned money are covered.  You can imagine the howling, and yelping of the finance industry and the Senators they fund.  And, here’s the best part.  The beauty of it was that the congress didn’t have any control over the agency; it would be funded and housed in the Federal Reserve Bank.

Did you see that?  It would be funded and housed in the Federal Reserve Bank.

Of course, Elizabeth Warren would have been the obvious choice to lead the new agency but she was despised not only by Republicans, but by none other than Larry Summers, Mr. Banking Deregulation A-hole himself and Obama’s right hand man. 

So as happens with Obama and his mama problem, he caved to Summers et al and named Richard Cordray to head up the new agency.  And don’t get me wrong, Richard Cordray is an excellent choice.  Not only is he a past Jeopardy champion, but he’s brilliant and a real consumer advocate.

“According to Cordray, the CFPB was designed to consolidate employees and responsibilities from a number of  other federal regulatory bodies, including the Federal Reserve, the Federal Trade Commission (FTC), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration and even the Department of Housing and Urban Development”. 

Do you see the beauty here??  All the agencies that were Private-Public partnerships under Democrats and Republicans now are under the new agency.  The Public-Private partnerships were designed so the private sector got all the profits and the public sector took all the losses. 

Warren blew it all up!  Everything gained from Reagan on, gone!

Well Elizabeth Warren went on to run for the United States Senate against Republican Scott Brown who had won the Massachusetts Senate Seat of Teddy Kennedy in a special election.  Warren got no help from Obama or any of the Kennedy minions. 

So what does Warren do? She introduces legislation along with John McCain to bring back a modern day Glass-Steagall Act. 

It's a pretty strange journey for an eight-decade old law. And the enthusiasm shows little sign of tapering off. This week, McCain, Cantwell, Sen. Elizabeth Warren (D-MA), and Sen. Angus King (I-ME) proposed the 21st Century Glass-Steagall Act, which would revive sections 20 and 32 of the act, which the Gramm-Leach-Bliley Act of 1999 repealed.  

Justice, sweet sweet justice.

So that gets me to Dr. Janet Yellen. 

The choices for Bernanke’s replacement had been narrowed down to two candidates.  Dr. Janet Yellen and Wall Street and Obama’s choice Larry Summers.  The Obama Administration began pushing Summers as a shoe in and nothing was going to stop them from installing Summers at the Fed.

Then the supporters of Yellen came out full force:

As chatter about Obama's preference for Larry Summers as the next Fed chair heats up, more concerned Americans are weighing in to tell the President that this would be a huge mistake. Summers has multiple conflicts of interest, serves Wall Street over Main Street, favors austerity over jobs when he's in power, he's a sexist—and that's just the beginning of the list. Obama's apparent choice is all the more disappointing when there is a highly qualified woman, Janet Yellen, available to take the job.

Yep, there it is again, Obama’s mama problem

Then an article entitled “More than 300 economists urge Obama to nominate Yellen as Fed chief” hit the press.

Nobel Prize-winning economist Joseph Stigltiz, along with letter-organizer Heidi Hartmann, president of the Institute for Women’s Policy Research and hundreds of top economic thinkers, explain why Janet Yellen is the best person to take the helm at the Federal Reserve. 

Old, Larry was inciting revulsion all over the place.  Then you had Guardian investigative reporter Gregory Palast, revealing secret memo’s between Summers, Geithner and Rubin on deregulating world banks, complicit in Russian free market manipulation and a whole panoply of quasi legal maneuvers by Summers and friends.

Then there were more letters supporting Yellen.

A number of US Senate Democrats are circulating a letter supporting Janet Yellen to be the next chair of the Federal Reserve in an ominous sign for supporters of Larry Summers for the job.

Ms Yellen, vice-chair of the Fed board, and Mr. Summers, a former Treasury secretary and White House economic adviser, are the two leading candidates to replace Ben Bernanke, who retires in January next year.

The letter has been pushed by Sherrod Brown from Ohio, Senate officials said, one of the chamber’s leading liberals and a longtime critic of financial deregulation and trade liberalization.

Signatories include Tom Harkin of Iowa, Dianne Feinstein of California and Dick Durbin, of Illinois, the number two Democrat in the Senate.

Well the White House and Obama are pissed about losing Summers and they will fight tooth and nail to keep Yellen from becoming the first female Fed Chair. 

Yes, it’s that Obama mama thing again.  Now with all those agencies under control of the Federal Reserve, Wall Street and the Obama Administration will do anything to keep Yellen out of the Federal Reserve and install someone to neuter the new CFPB. 

So America, it’s time to come out of your Hopium induced comas and contact your Senator and demand Yellen be the next Fed Chair. The capitol switchboard is 202-224-3121.  Call now.

I know you thought Obama was your savior, beyond race, the new messiah.  But sorry, it was just tainted love.

By Patricia Baeten

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