Obama Administration Supporting Fed Audit in Wall Street Reform Bill

The audit has bipartisan support.

The Obama administration now says it supports a proposal to audit the Federal Reserve's lending practices that has won broad bipartisan backing in the Senate.

Deputy Treasury Secretary Neal Wolin said last-minute changes to an amendment before the Senate would ensure that the Federal Reserve's monetary policy authority would not be compromised by an audit. AP

The Fed and the White House originally opposed the audit.

Paul and Grayson Team On Federal Reserve Audit

At first glance, it seems like a good idea. Sunshine never hurts. But then again, all Congress does is make a political mockery of everything. Perhaps without the politics, the Federal Reserve is able to do important work. Here's its working definition of the FRB:

The Federal Reserve is considered an independent central bank. It is independent since its decisions do not have to be ratified by the President or Congress. The Federal Reserve System was created by Congress in 1913 "to provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes." This Nation

Ron Paul has long believed that the Federal Reserve should be abolished. See who supported the measure here. About a dozen House democrats voted yes and all of the republicans voted yes.

The House Financial Services Committee has approved Rep. Ron Paul’s measure to drastically expand the government’s power to audit the Federal Reserve.

The measure, based on a Paul proposal that has attracted more than 300 co-sponsors, passed, 43-26, as an amendment to a financial reform bill. Florida Democrat and fellow Fed critic Alan Grayson co-sponsored the amendment with Paul and played a leading role drumming up support for it among committee members. The adoption of this amendment is an extraordinary victory for Paul, whose libertarian, anti-Fed leanings have often been dismissed by the political establishment.

The amendment would give the Government Accountability Office much greater to audit the Federal Reserve, which has a long history of independence from congressional audits. Paul and Grayson beat out a competing measure offered by Rep. Mel Watt (D-N.C.), who after weeks of negotiations with the pair felt their measure would threaten the Fed’s monetary policy. Politico

Geithner Announces Crackdown on Foreclosure Rescue Scams

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Three Trustees Watch Over AIG

Three trustees (named in January), each paid $100,000, oversee AIG, so the government indirectly runs AIG, but not really. In my continuing quest to understand the dynamics of our failed financial system, I found this Planet Money podcast enlightening. Another good podcast is Science Friday's story on the Wall Street physicists and mathematicians (Quants) who created all the crazy derivatives that no one could understand. Science Friday makes an argument for why quants are not to blame.

L&HI: The Federal Reserve Board of New York has named 3 trustees to control the government’s 79.9% share of American International Group Inc., New York.

The trustees are Jill Considine, a former New York banking commissioner; Chester B. Feldberg, former chairman of Barclays Americas; and Douglas L. Foshee, president and chief executive officer of El Paso Corp.

The New York Fed said the appointments were made with the full support of the Treasury Department.

From Planet Money:

The anger towards AIG has been dominating the headlines this week, but not everyone is seeing red. Ian Bremmer of Eurasia Group says the government has much bigger fish to fry and that AIG outrage is a luxury we can't afford.

Ben Bernanke on 60 Minutes-Video

This was enlightening. I can't say I understand everything but at least Bernanke seems human, smart and capable:


Making the money

Do People Even Want to Borrow Money?

The Federal Reserve begins two-day meetings on Tuesday, which means that the stock market could continue its track up or go back down, depending on how investors view the meeting. There is a chicken and egg thing going on. Will freeing up credit for lending boost borrowing for auto loans, homes and student loans, or are consumers and business wary of borrowing? That is what the Obama administration and the Fed are trying to fix. The TALF program will help get credit flowing but how do you get people to borrow? 

Sen. Bill Bradley on Obama's economic policy:

Obama: A Lack of Adult Supervision in Financial World

Obama announces Mary Schapiro, head of the SEC, Georgetown University law professor Daniel Tarullo to fill one of two vacancies on the seven-seat Federal Reserve Board and former Treasury official Gary Gensler to head the Commodities Futures Trading Commission, which regulates the U.S. commodity futures and options market.

He says a "me first" ethic has dominated the financial services industry and that there has been a lack of adult supervision. The premise with the Bush White House has been that deregulation is always good. That is why he's appointing people who don't have a disdain for regulation.

Gensler had some really kind comments. I like when people, especially financial ones, act human every now and again. Gensler's wife, Francesca, died of breast cancer in 2006.
Obama also speaks about the choice of Rick Warren to give the inaugural invocation.

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