"- The GAO identified 18 former and current members of the Federal Reserve's board affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis including General Electric, JP Morgan Chase, and Lehman Brothers."
Submitted by Mike Krieger
Federal employees whose compensation averages more than $126,000 and the nation’s greatest concentration of lawyers helped Washington edge out San Jose as the wealthiest U.S. metropolitan area, government data show. The U.S. capital has swapped top spots with Silicon Valley, according to recent Census Bureau figures, with the typical household in the Washington metro area earning $84,523 last year. The national median income for 2010 was $50,046...The flow of federal dollars in and around the nation’s capital helped the region weather the economic slump better than most areas and is contributing to its recovery. The unemployment rate in the Washington metro area in August was 6.1 percent, compared with 10 percent in San Jose, according to Labor Department figures.
Nationally, joblessness was 9.1 percent in September for a third straight month. “The region did experience a shorter, shallower recession than San Jose,” said Sara Kline, a Washington analyst at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The federal government stepped in to take efforts to dampen the recession. It was focused to some extent in the D.C. area as well, given the presence of federal workers there and contractors. That insulated it from more of a downturn.”
- Bloomberg article from yesterday http://www.bloomberg.com/news/2011-10-19/beltway-earnings-make-u-s-capit...
As a result of an amendment by Sen. Bernie Sanders to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Government Accountability Office completed its second audit of the Federal Reserve. This report focuses on the enormous conflicts of interest that existed at the Federal Reserve during the financial crisis.
Here is what the GAO found:
- The affiliations of the Federal Reserve's board of directors with financial firms continue to pose "reputational risks" to the Federal Reserve System.
- The policy of the Federal Reserve to give members of the banking industry the power to both elect and serve on the Federal Reserve's board of directors creates "an appearance of a conflict of interest."
- The GAO identified 18 former and current members of the Federal Reserve's board affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis including General Electric, JP Morgan Chase, and Lehman Brothers.
- There are no restrictions on directors of the Federal Reserve Board from communicating concerns about their respective banks to the staff of the Federal Reserve.
- Many of the Federal Reserve's board of directors own stock or work directly for banks that are supervised and regulated by the Federal Reserve. These board members oversee the Federal Reserve's operations including salary and personnel decisions.
- Under current regulations, Fed directors who are employed by the banking industry or own stock in financial institutions can participate in decisions involving how much interest to charge to financial institutions receiving Fed loans; and the approval or disapproval of Federal Reserve credit to healthy banks and banks in "hazardous" condition.
- The Federal Reserve does not publicly disclose its conflict of interest regulations or when it grants waivers to its conflict of interest regulations.
- 21 members of the Federal Reserve's board of directors were involved in making personnel decisions in the division of supervision and regulation at the Fed.
- The Sanders Report on the GAO Audit on Major Conflicts of Interest at the Federal Reserve.
You MUST READ THIS.
Rogue Government Traders
Everything that is happening around the world right now reminds me of the movie “Rogue Trader.” In case you haven’t seen it, it is the 1999 film where Ewan McGregor plays the role of Nick Leeson, the Barings Bank trader whose trades gone bad brought down Barings Bank, the oldest merchant bank in London at the time. The reason why this story is so compelling and why I recommend everyone go watch it is because it demonstrates what can happen when a small loss or mistake is ignored and then covered up in a futile attempt to get back to where you were. In this case, Nick Leeson started losing money trading futures in Singapore and rather than cutting his losses he kept trading more and bigger. Pretty quickly, the losses became so enormous he knew he would be forced to close them out if someone noticed and he might even be fired. So what did he do? He decided to transfer the losses to a hidden account. The 88888 account. He figured he would hide the losses there and then close the hidden account when he got back to even. He never got back to even and Barings went bankrupt.... distressingly continued here>>
