Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts

BeforeIt'sNews

The first ever GAO(Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out. Ben Bernanke(pictured to the left), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning:  http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious — the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.

“This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.” – Bernie Sanders(I-VT)

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows..

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
and many many more including banks in Belgium of all places

View the 266-page GAO audit of the Federal Reserve(July 21st, 2011): http://www.scribd.com/doc/60553686/GAO-Fed-Investigation

Source: http://www.gao.gov/products/GAO-11-696

FULL PDF on GAO server: http://www.gao.gov/new.items/d11696.pdf

Senator Sander’s Article: http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

Dallas Fed: Top five U.S. banks hold over half of industry’s assets

Raw Story
Stephen C. Webster

 In its annual report for 2011, issued on Wednesday, the Federal Reserve Bank of Dallas released a startling report revealing that 52 percent of all the assets held by the entire banking industry have now become aggregated into the hands of just five companies, and the top 10 institutions have swollen so large that they possess wealth that equates to roughly half of America’s annual gross domestic product (GDP).

It is for those reasons that Dallas Fed president Richard Fisher, who’s otherwise known as a conservative budget hawk, has embraced the radical cause of breaking up the nation’s largest banks and forever ending “too big to fail.” In a letter introducing the 2011 report, he cautions that Congress may not have gone far enough with prior attempts at financial reforms, and that those bills may even be working against the struggling economic recovery underway.

Alarming as that sounds, it’s the Dallas Fed’s chart of U.S. banking assets that’s most startling.

In his letter, Fisher adds that if the wealthiest sample group is expanded to the top 10 banks, their total assets are worth approximately half of America’s annual GDP, which eclipsed $14.5 trillion in 2010.
He goes on to suggest that Congress did not go far enough with the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act (PDF) because it did not effectively deal with the problem of institutions growing to such heights that their fall threatens the whole economy.

Too Big To Jail

Slate
Simon Johnson

Why did the Obama administration agree to a "robo-signing" settlement that barely punishes the huge banks behind the foreclosure crisis?

The government reached a settlement with five major banks regarding mortgage-servicing abuses during the foreclosure criss

Earlier this month, the federal government and most states agreed to  a $25 billion settlement with Bank of America, JPMorgan Chase, Citibank, Wells Fargo, and Ally Financial for carrying out fraudulent foreclosures on mortgages. The settlement will direct $20 billion toward mortgage relief for borrowers and $5 billion to the government. As Dennis Kelleher of Better Markets has argued, this deal is a complete sell-out to the financial industry.

First, there was no serious criminal prosecution, meaning that no one will be charged with a felony and no one will go to jail. In terms of affecting executives’ incentives, this is the only thing that matters.

Even the terminology used to frame the discussion is wrong. Kelleher, an attorney with extensive experience in private practice and the public sector, tells it like it is: “ ‘Robo-signing’ is massive, systematic, fraudulent, criminal conduct.” Alternatively, as he points out, we could just call it “lying, cheating, and stealing.”

Second, the civil penalties in this settlement—a form of fine—are minuscule relative to the size of the companies involved. As Shahien Nasiripour, one of the best reporters on this issue, dryly put it: “None of the five lenders have said they expect to incur a material charge due to the settlement.” In other words, from a corporate perspective, the penalty is a trifling affair.

Third, such fines are, in any case, paid by the companies’ shareholders, not by their executives or board members (all of whom carry insurance). In the rare cases in which fines have been levied on individuals, either their insurance policies picked up most of the bill, or the penalties were trivial relative to the cash compensation that they received while committing their crimes—or both.

As if all of this weren’t bad enough, the banks reportedly will be able to use government money to write down the value of mortgages, which amounts to subsidizing them to pay their own meaningless fines.

The Obama administration and its allies have worked hard to sell its settlement with the banks as one that will have a meaningful impact on the housing market. But nothing could be further from the truth. As Kelleher points out, the United States has “more than 10 million homes under water” (the outstanding mortgage exceeds the house’s value). “Twenty billion dollars doesn’t make a dent in that: one million homes at $20,000 loan forgiveness is it.”

In fact, the Obama administration’s settlement with the mortgage lenders is consistent with its track record on all of its policies related to the financial sector, which has been abysmal. But it is also puzzling. Why would the administration continue to bend over backward to be lenient toward top bankers under these circumstances?

I honestly do not believe that the administration’s stance reflects any form of corruption—payments made to individuals or even to political campaigns. And, in this case, it does not even appear to reflect the lobbying power of big financial players. That power certainly explains why the Dodd-Frank financial reforms enacted in 2010 were not stronger, and why there is now so much opposition to effective implementation of that legislation (for example, there is currently a huge fight around the “Volcker rule,” which would limit proprietary trading by megabanks). But mortgage lenders’ criminal activities are another matter.

Speculation in Agricultural Commodities: Driving up the Price of Food Worldwide and plunging Millions into Hunger CFTC treads water on world hunger

Global Research
Edward Miller

The Commodity Futures Trading Commission (CFTC) has again delayed the introduction of position limits required under the Dodd-Frank Act. These limits are intended to prevent speculation in (among other things) agricultural commodities, speculation which, many critics argue, have driven up the price of food worldwide and plunged millions into hunger.

In late 2006, the price of food and other commodities began rising precipitately, continuing throughout 2007 and peaking in 2008. Millions were cast below the poverty line and food riots erupted across the developing world, from Haiti to Mozambique. While analysts initially framed the crisis in terms of market fundamentals (such as rising population, increased demand for resource-intensive food, declining stockpiles, biofuel and agricultural subsidies, and crop shortfalls from natural disasters), a growing number of experts have tied the massive spikes to financial intermediation. As economist Jayati Ghosh explains:

“It is now quite widely acknowledged that financial speculation was the major factor behind the sharp price rise of many primary commodities , including agricultural items over the past year ... Even recent research from the World Bank (Bafis and Haniotis 2010) recognizes the role played by the “financialisation of commodities” in the price surges and declines, and notes that price variability has overwhelmed price trends for important commodities.”

Trading Regulation for Financialisation

This kind of speculation was made possible by deregulation in the US financial sector, in particular the Commodity Futures Modernization Act 2000 (CFMA), exempting commodity futures trading from regulatory oversight. Crucially for our narrative, this removed limits on the number of contracts that could be held at any one time (called position limits) from the equation. Firms like Goldman Sachs, Morgan Stanley and Barclays began developing index funds (collective investment schemes) based on these commodities, specializing in buying futures contracts in the belief that the future price will be higher than the present price. Journalist Fred Kaufman eloquently stated this in his Harpers article ‘The Food Bubble’:

“Goldman Sachs envisioned a new form of commodities investment, a product for investors who had no taste for the complexities of corn or soy or wheat, no interest in weather and weevils, and no desire for getting into and out of shorts and longs - investors who wanted nothing more than to park a great deal of money somewhere, then sit back and watch that pile grow.”

All manner of institutional investors began dumping capital into these funds, driving prices, and profits, through the roof:

“As the global financial system became fragile with the continuing implosion of the US housing finance market, large investor, especially institutional investors such as hedge funds and pension funds and even banks, searched for other avenues of investment to find new sources for profit. Commodity speculation increasingly emerged as an important area for such financial investment.”

Traditionally, futures contracts play an important role in price discovery, reducing the price risk of the commodity itself. However without a limit to the number of commodity futures contracts that could be held, investors were able to withhold huge amounts of food from entering the market. When combined with the real supply and demand factors mentioned above, this spelt volatile price spikes; between 2005 and 2008 the price of maize nearly tripled, wheat prices increased by 127%, and rice by 170%. Throughout the crisis, at least 40 million people went driven into hunger, and the number of people driven into extreme poverty rose from 130 to 150 million.

And worse, this speculation wasn’t limited to the 2007-2008 period. While commodity prices fell again in 2009, the latter half of 2010 saw them again skyrocket, reaching an all-time high at the end of that year, and remaining high into this year. Today, over a billion people remain hungry, while wealthy investors continue to reap huge profits by gambling on the stomachs of the world’s most vulnerable.

Dodd-Frank Reform

Following the global financial crisis, Representative Barney Frank and the Chairman of the Senate Banking Committee Chris Dodd proposed legislation to boost US financial stability. The Dodd-Frank Act provided sweeping financial reforms to the US financial sector, including reforms to commodity futures regulation. Section 737 (4) requires the CFTC to ‘establish limits on the amount of positions, as appropriate, other than bona fide hedge position, that may be held by any person with respect to contracts of sale for future delivery or with respect to options on the contracts or commodities traded on or subject to the rules of a designated contract market.’ These limits should, ‘to the maximum extent practicable ... diminish, eliminate, or prevent excessive speculation ... [and] deter and prevent market manipulation, squeezes and corners...”.

So far so good right, problem solved? Think again. The legislation provided a 270-day window in which position limits were to be put in place, meaning that by the 17th of April this year, this problem should have been solved, or, at the very least, ameliorated. However that date came and went, and the CFTC failed to reach agreement. A new date was set for the 4th of October, however that date also came and went with no further advance. CFTC Chairman Gary Gensler responded, saying “We’re not trying to do this against a clock. We’re trying to do this in a way that gets it right. So a few more weeks is a small thing for us to be concerned with if we’re going to get it thought through in a better way.” The rules have now been delayed until October 18.

The Speculators Fight Back

The CFTC isn’t so much concerned with world hunger as its reason for regulating commodity futures, and has hardly addressed the issue in public statements. However futures trading also affects other commodities such as oil, gold and silver, all of which have risen sharply over the past few years. Robert Pollin and James Heintz of the Political Economy Research Institute at the University of Massachusetts calculate that,

Banks Seek Liability Shield for Future Home Mortgages

Insurance Journal

Dave Clarke

U.S. banks still wrestling with legal troubles springing from the subprime mortgage crisis are lobbying the new consumer agency for strong legal protection for future home loans.

The Consumer Financial Protection Bureau is finalizing a proposal to entice banks to offer straightforward loans — without interest-only payments and excessive fees — by providing a legal shield. The question is whether to give banks full protection, known as a “safe harbor,” or a more limited legal shelter.

“It is critically important that the final rule provide a safe harbor,” Bank of America Corp. wrote in a July 22 letter. “If the final requirements instead increase the liability exposure of creditors … the result will be increased costs and further reduction in credit availability to the very consumers that the reforms were designed to protect.”

The Federal Reserve issued a proposed rule on the matter earlier this year, but then punted it to the consumer agency, which now has jurisdiction. The agency, which was created by the Dodd-Frank oversight law, opened its doors on July 21.

This rule will be one of the first big tests of how tough the consumer agency will be on mortgage markets.

The proposal has already launched a flurry of letters from large banks such as Wells Fargo & Co., JPMorgan Chase & Co. and Bank of America Corp.

Those banks and others are hobbled by stalled foreclosures nationwide due to legal questions and multibillion-dollar lawsuits from investors such as American International Group Inc that claim the quality of securities backing the mortgages was misrepresented.

The banks argue the safe harbor for future high-quality loans would promote lending and assure investors who buy mortgage-backed securities that legal battles are not on the horizon.

On the other side of the issue, consumer advocates charge banks want to take away one of the few legal tools available to borrowers who believe a lender pulled a fast one on them.

12 Things That The Mainstream Media Is Being Strangely Quiet About Right Now

The American Dream

As the mainstream media continues to be obsessed with Anthony Weiner and his bizarre adventures on Twitter, much more serious events are happening around the world that are getting very little attention.  In America today, if the mainstream media does not cover something it is almost as if it never happened. Right now, the worst nuclear disaster in human history continues to unfold in Japan , U.S. nuclear facilities are being threatened by flood waters, the U.S. military is bombing Yemen, gigantic cracks in the earth are appearing all over the globe and the largest wildfire in Arizona history is causing immense devastation.  But Anthony Weiner, Bristol Palin and Miss USA are what the mainstream media want to tell us about and most Americans are buying it.

In times like these, it is more important than ever to think for ourselves.  The corporate-owned mainstream media is not interested in looking out for us.  Rather, they are going to tell us whatever fits with the agenda that their owners are pushing.

That is why more Americans than ever are turning to the alternative media.  Americans are hungry for the truth, and they know that the amount of truth that they get from the mainstream media continues to decline.

The following are 12 things that the mainstream media is being strangely quiet about right now....

#1 The crisis at the Fort Calhoun nuclear facility in Nebraska has received almost no attention in the national mainstream media.

Back on June 7th, there was a fire at Fort Calhoun.  The official story is that the fire was in an electrical switchgear room at the plant.  The facility lost power to a pump that cools the spent fuel pool for approximately 90 minutes.  According to the Omaha Public Power District, the fire was quickly extinguished and no radioactive material was released.

The following sequence of events is directly from the Omaha Public Power District website....

There was no such imminent danger with the Fort Calhoun Station spent-fuel pool.
Due to a fire in an electrical switchgear room at FCS on the morning of June 7, the plant temporarily lost power to a pump that cools the spent-fuel pool.
The fire-suppression system in that switchgear room operated as designed, extinguishing the fire quickly.
FCS plant operators switched the spent-fuel pool cooling system to an installed backup pump about 90 minutes after the loss of power.
During the interruption of cooling, temperature of the pool increased a few degrees, but the pool was never in danger of boiling.

Due to this situation, FCS declared an Alert at about 9:40 a.m. on June 7.
An alert is the second-least-serious of four emergency classifications established by the Nuclear Regulatory Commission.
At about 1:15 p.m. on June 7, FCS operators declared they had taken all appropriate measures to safely return to the previously declared Notification of Unusual Event emergency classification. (See first item above.)
But the crisis at Fort Calhoun is not over.  Right now, the nuclear facility at Fort Calhoun is essentially an island. It is surrounded by rising flood waters from the Missouri River.

Officials claim that there is no danger and that they are prepared for the river to rise another ten feet.

The Cooper Nuclear Station in Brownville, Nebraska is also being threatened by rising flood waters.  A "Notification of Unusual Event" was declared at Cooper Nuclear Station this morning at 4:02.  This notification was issued because the Missouri River's water level reached 42.5 feet.

Right now the facility is operating normally and officials don't expect a crisis.

But considering what has been going on at Fukushima, it would be nice if we could have gotten a lot more coverage of these events by the mainstream media.

#2 Most Americans are aware that the U.S. is involved in wars in Iraq, Afghanistan and Libya.  However, the truth is that the U.S. military is also regularly bombing Yemen and parts of Pakistan.  If you count the countries where the U.S. has special forces and/or covert operatives on the ground, the U.S. is probably "active" in more countries in the Middle East than it is not.  Now there are even persistent rumors that U.S. ground units are being prepared to go into Libya.  Are we watching the early stages of World War 3 unfold before our eyes in slow motion?

#3 The crisis at Fukushima continues to get worse.  Arnold Gundersen, a former nuclear industry senior vice president, recently made the following statement about the Fukushima disaster....

"Fukushima is the biggest industrial catastrophe in the history of mankind"

TEPCO has finally admitted that this disaster has released more radioactive material into the environment than Chernobyl did.  That makes Fukushima the worst nuclear disaster of all time, and it is far from over.

Massive amounts of water is being poured into the spent fuel pools in order to keep them cool.  This is creating "hundreds of thousands of tons of highly radioactive sea water" that has got to go somewhere.  Inevitably much of it will get into the ground and into the sea.

Arnold Gundersen says that the scope of this problem is almost unimaginable....

"TEPCO announced they had a melt through. A melt down is when the fuel collapses to the bottom of the reactor, and a melt through means it has melted through some layers. That blob is incredibly radioactive, and now you have water on top of it. The water picks up enormous amounts of radiation, so you add more water and you are generating hundreds of thousands of tons of highly radioactive water."

The mainstream media is not paying as much attention to Fukushima these days, but that doesn't mean that it is not a major league nightmare.

Elevated levels of radiation are being reported by Japanese bloggers all over eastern Japan.  There are reports of sick children all over the region.  One adviser to the government of Japan says that an area approximately 17 times the size of Manhattan is probably going to be uninhabitable.

Of course the mainstream media has been telling us all along that Fukushima is nothing to be too concerned about and that authorities in Japan have everything under control.

If the mainstream media is not going to tell us the truth, how are they going to continue to have credibility?

#4 Members of Congress continue to mention Christians as a threat to national security.  For example, during a recent Congressional hearing U.S. Representative Sheila Jackson Lee warned that "Christian militants" might try to "bring down the country" and that such groups need to be investigated.

#5 China's eastern province of Zhejiang has experienced that worst flooding that it has seen in 55 years.  2 million people have already been forced to leave their homes.  China has already been having huge problems with their crops over the past few years and this is only going to make things worse.

#6 Thanks to the Dodd-Frank Act, over the counter trading of gold and silver is going to be illegal starting on July 15th.  Or at least that is what some companies apparently now believe.  The following is an excerpt from an email that Forex.com recently sent out to their customers....

Important Account Notice Re: Metals Trading

We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.

In conjunction with this new regulation, FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.

We encourage you to wind down your trading activity in these products over the next month in anticipation of the new rule, as any open XAU or XAG positions that remain open prior to July 15, 2011 at approximately 5:00 pm ET will be automatically liquidated.

We sincerely regret any inconvenience complying with the new U.S. regulation may cause you. Should you have any questions, please feel free to contact our customer service team.

Sincerely,
The Team at FOREX.com


Apparently, Section 742(a) of the Dodd-Frank Act prohibits anyone "from entering into, or offering to enter into, a transaction in any commodity with a person that is not an eligible contract participant or an eligible commercial entity, on a leveraged or margined basis."

So what impact is this going to have on the gold and silver markets?

Nobody is quite sure yet.

#7 All over the world, huge cracks are appearing for no discernible reason.  For example, a massive crack that is approximately 3 kilometers long recent appeared in southern Peru.  Also, a 500 foot long crack suddenly appeared recently in the state of Michigan.  When you also throw in all of the gigantic sinkholes that have been opening all over the world, it is easy to conclude that the planet is becoming very unstable.

#8 According to U.S. Forest Service officials, the largest wildfire in Arizona state history has now covered more than 500,000 acres.  But based on the coverage it is being given by the mainstream media you would think that it is a non-event.

#9 There are reports that North Korea has tested a "super EMP weapon" which would be capable of taking out most of the U.S. power grid in a single shot.  The North Koreans are apparently about to conduct another nuclear test and that has some Obama administration officials very concerned.

#10 All over the United States, "active shooter drills" are being conducted in our public schools.  Often, most of the students are not told that these drills are fake.  Instead, students often go through hours of terror as they think a hostage situation or a shooting spree is really taking place.

#11 NASA has just launched a "major" preparedness initiative for all NASA personnel.  The following is an excerpt about this plan from NASA's own website....

A major initiative has been placed on Family/Personal Preparedness for all NASA personnel. The NASA Family/Personal Preparedness Program is designed to provide awareness, resources, and tools to the NASA Family (civil servants and contractors) to prepare for an emergency situation. The most important assets in the successful completion of NASA’s mission are our employees’ and their families. We are taking the steps to prepare our workforce, but it is your personal obligation to prepare yourself and your families for emergencies.

#12 Over the past week over 40 temporary "no fly zones" have been declared by the FAA.  This is very highly unusual.  Nobody seems to know exactly why this is happening.

So what do all of these things mean?

It would be nice if the mainstream media would examine some of these important issues more closely and do some honest reporting on them.

Perhaps you have an opinion on some of these issues.  Feel free to share what you think by leaving a comment below....