Danny Panzella
TruthSquad.TV
11/2/2011
In a press conference in Washington DC today Federal Reserve Chairman Ben Bernanke responded to a question about the Occupy The Fed faction of the Occupy Wall Street protests.
He offered platitudes and sympathized with the movement’s dissatisfaction with economic inequality, but said protesters should not blame the Fed for bailing out the banks.
Oh really? Well who should we blame? The Federal Reserve Bank which doled out $16.1 trillion in emergency loans to U.S. and foreign financial institutions between Dec. 1, 2007 and July 21, 2010, according to figures produced by the government’s first-ever audit of the central bank.
“I think that the concerns about the Fed are based on misconceptions,” Bernanke continued.
“The Federal Reserve was involved, obviously, in trying to stabilize the financial system in 2008 and 2009, a very simplistic interpretation of that was that we were doing that because we wanted to preserve, you know, banker salaries. That is obviously not the case.” No, obviously banker salaries are a straw man to keep the tea party and occupy wall street distracted while Ben and his cronies continue their fraud.
On October 3, 2008, the Fed acquired the ability to pay interest to its member banks on the reserves the banks maintain at the Fed. Reuters reported:
“The U.S. Federal Reserve gained a key tactical tool from the $700 billion financial rescue package signed into law on Friday that will help it channel funds into parched credit markets. Tucked into the 451-page bill is a provision that lets the Fed pay interest on the reserves banks are required to hold at the central bank.”
The Federal Reserve website states:
* “The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations – possibly leading to some confusion about “ownership.” For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.“
So the Federal Reserve is not operated for its OWN profit, but it DOES profit its shareholder banks to the tune of 6% per year.
* “[The Federal Reserve] is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.”
Where does the Fed receive its funding? The Treasury department issues bonds; Wall Street firms sell those bonds. It is safe to say most if not all of those bond trading firms are owned by shareholders of the Federal Reserve System. When the Fed wants to “expand the money supply” (create money), it steps in and buys bonds from these dealers with newly-issued dollars. It creates those dollars by adding zeros onto their account balance. The bonds are the “reserves” that the banking establishment uses to back its loans. In another bit of sleight of hand known as “fractional reserve” lending, the same reserves are lent many times over, further expanding the money supply, generating interest for the banks with each loan.
* “The Federal Reserve’s income is derived primarily from the interest on U.S. government securities that it has acquired through open market operations. . . . After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury.”
So after paying its expenses which include a 6% dividend to its member banks, the tax payer also pays interest on the reserves held by the shareholder banks. 10% is the Feds basic reserve requirement. Federal Reserve Statistical Release H.8 puts the total “loans and leases in bank credit” as of October 2011 at $ 6,864.9 billion. Ten percent of that is a little less than $700 billion. That means we the taxpayers will be paying interest to the banks on at least $700 billion annually. With the wonder of fractional reserve lending those banks can then make interest on 10 times (legally) that amount. This does not take into account the derivatives fraud that artificially increased that leverage.
So what did the recent GAO audit of the Fed reveal? Citigroup received the most financial assistance from the Fed, at $2.5 trillion. Morgan Stanley came in second with $2.04 trillion, followed by Merill Lynch at $1.9 trillion and Bank of America at $1.3 trillion.
Are any of those banks shareholders in the Federal Reserve System? You betcha!
“What we were doing was trying to protect the financial system in order to prevent a serious collapse of both the financial system and the American economy. And we needed to take those steps. If we hadn’t taken them the consequences would have been dire.”
Yes, dire for the banks that engaged in the fraud and for the consumers that are victimized by this neo-feudal financial system they keep calling capitalism.
The audit also revealed that the Fed outsourced its lending operations on a no-bid basis to the very financial institutions which sparked the financial crisis to begin with and of course also happen to be shareholders in the Fed Rsv. System.
The regulatory agencies are stacked with Wall Street executives, Congress is funded by Wall St., and the top banks control the monetary system via their ownership of The Federal Reserve Banks. In early October Bernanke was surprisingly honest when he said that excessive risk taking on Wall Street and the failure of financial regulators “had a lot to do” with the recession.
Moral hazard + conflicts of interest = financial terrorism.
