the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything."
Does congress not have the power to change that act?
Congress certainly has the authority to change the Act if they did so in the first place in 1950. I do not think that they did have the authority to give up their responsibilty if it was un-constitutional in the first place.
One of posters on this thread, 'jhancock' said that quote "creating money isn't spending."
Well, hey buddy! What do you call what the Fed has been doing since 2008? So far they have lent 3 Trillion US dollars and provided some 5.7 Trillion bucks in guarantees on PRIVATE investments.
Definitely illegal according to the Constitution. It is outside of their mandate. How it will play out if we, the tax-payer, tell them to take a flying leap...Beats me!
I support H.R. 1207 that would require the GAO to audit the Fed. It is a start. After that I am sure most Americans will want to get rid of it and control our own money.
I have been taught the U.S. Constitution mandates ALL spending must be initiated through Congress. If this is correct, then the above cited Act is not constitutional.
There are many that argue the Fed has long been exercising powers it does not have. We shall see how much longer this behavior continues.
Can anyone supply a link to an article that actually explains the stuff that this article purports to be about? The test of "actually explains" being "explains how to prevent."
This article explains what needs to be done and what needs to be stopped:
http://www.aspousa.org/index.php/2009/03/no-we-cant/
FTA: What is the biggest impediment in 2009 to mitigating the harmful effects of energy problems in the 21st century? The answer may surprise you—it is insolvent zombie banks and our entrenched FIRE economy (Finance, Insurance, Real Estate).
Matt Tiabbi does write with a certain muckraker-type style, and because it's only an article, it can only go so deep in the story. Having said that, as far as I can tell what he says is pretty much spot on and very much factually correct.
One example: He spends a few sentences explaining how banks created CDOs: take some good loans, take some bad loans, put them together and using some math convince regulators and investors that these things are AAA rated. Wired wrote an article (itself not that detailed) explaining the formula that allowed them to do this: http://www.wired.com/techbiz/it/magazine/17-03/wp_quant
I don't think there can be an article that explains this stuff. Some years from now, someone who is both smart and an excellent writer will be able to look back and write a book that explains everything, but until then this stuff will be about as good as it gets.
Details on "how to prevent" are even harder, and you'll probably have to look at the upcoming G20 summit in April where the Europeans will try to at least start talking about some kind of regulatory framework, while the Americans will just want everyone to throw more money at the same people that fucked things up.
Paul: There is probably more than a single article's worth in terms of explaining how to prevent, but you could start with Barry Ritholtz' blog http://www.ritholtz.com/blog -- he also has a book coming out that will probably be very illuminating: http://www.amazon.com/exec/obidos/ASIN/0470520388/thebigpict... . You might also try nakedcapitalism.com, another well respected blog.
Why would he? It's not like he did anything illegal, and if you tried to say what he was doing should be illegal, or at the very least regulated and in the open, then you would have been called a loser socialist who's jealous of financial innovation.
Let's not forget what the prevailing attitude was just a few years ago, and you can still see lots of it left over today.
Cassano was not committing fraud in the narrow context that our politicians had been bought off to ease regulations to allow him to do what he did. Additionally, our executive branch pulled the age-old political trick of "speak loudly but underfund". That is, there was noone providing oversight in the OTS. According to the article, there was only 1 OTS employee that had a background and position to oversee the entire industry.
Incidentally, a similar thing happened with Pentagon spending: for much of the Bush years, there was reportedly only 1 person to review ALL expense reports from all contractors. The result was everything was approved; zero oversight.
No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what's left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks.
Facilities like CRA and TIF did not contribute to the housing crisis in the manner you postulate.
They contributed by giving real estate developers political and, more importantly, financial cover for redeveloping inner city areas. The areas redeveloped were full of impoverished people, BUT the areas were not redeveloped FOR the impoverished people. Generally, those people were moved out to section 8 housing, (rentals), and new people would come in. People who were decidedly non poor. Then, of course, those people started to default on their mortgages and the rest is history. Witness the downtown condo boom that happened across the US. Then witness the downtown condo bust that is happening presently. Been to Chicago or Miami lately?
So, in short, the developers never sold their condos to "ex-strippers on work release and Taco Bell clerks". They sold them to retirees, empty-nesters, and a crapload of yuppies and speculators. Now the data coming in right now, at least the data for the developer that I worked for, seems to indicate that selling to yuppies and speculators was a mistake. But the gentrification of those neighborhoods was not a mistake, in my own opinion. I know others may think differently.
FTA:"The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses)."
[+] [-] jeroen|17 years ago|reply
the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything."
Does congress not have the power to change that act?
(please note that I'm not from the US)
[+] [-] szn46|17 years ago|reply
One of posters on this thread, 'jhancock' said that quote "creating money isn't spending."
Well, hey buddy! What do you call what the Fed has been doing since 2008? So far they have lent 3 Trillion US dollars and provided some 5.7 Trillion bucks in guarantees on PRIVATE investments.
Definitely illegal according to the Constitution. It is outside of their mandate. How it will play out if we, the tax-payer, tell them to take a flying leap...Beats me!
I support H.R. 1207 that would require the GAO to audit the Fed. It is a start. After that I am sure most Americans will want to get rid of it and control our own money.
[+] [-] jhancock|17 years ago|reply
There are many that argue the Fed has long been exercising powers it does not have. We shall see how much longer this behavior continues.
[+] [-] pg|17 years ago|reply
[+] [-] gasull|17 years ago|reply
http://www.aspousa.org/index.php/2009/03/no-we-cant/ FTA: What is the biggest impediment in 2009 to mitigating the harmful effects of energy problems in the 21st century? The answer may surprise you—it is insolvent zombie banks and our entrenched FIRE economy (Finance, Insurance, Real Estate).
Or if you want a quick 10-minute explanation of what should be done watch this interview with Michael Hudson: http://www.youtube.com/watch?v=3pwAFohWBL4
My favorite source for economic news is entrepreneur Eric Janszen's articles at http://itulip.com . HTH.
[+] [-] martythemaniak|17 years ago|reply
One example: He spends a few sentences explaining how banks created CDOs: take some good loans, take some bad loans, put them together and using some math convince regulators and investors that these things are AAA rated. Wired wrote an article (itself not that detailed) explaining the formula that allowed them to do this: http://www.wired.com/techbiz/it/magazine/17-03/wp_quant
I don't think there can be an article that explains this stuff. Some years from now, someone who is both smart and an excellent writer will be able to look back and write a book that explains everything, but until then this stuff will be about as good as it gets.
Details on "how to prevent" are even harder, and you'll probably have to look at the upcoming G20 summit in April where the Europeans will try to at least start talking about some kind of regulatory framework, while the Americans will just want everyone to throw more money at the same people that fucked things up.
[+] [-] earl|17 years ago|reply
[+] [-] agotterer|17 years ago|reply
[+] [-] antidaily|17 years ago|reply
[+] [-] martythemaniak|17 years ago|reply
Let's not forget what the prevailing attitude was just a few years ago, and you can still see lots of it left over today.
[+] [-] jhancock|17 years ago|reply
Incidentally, a similar thing happened with Pentagon spending: for much of the Bush years, there was reportedly only 1 person to review ALL expense reports from all contractors. The result was everything was approved; zero oversight.
This is what I term "engineered incompetence".
[+] [-] drewr|17 years ago|reply
Someone did ask for the latter: http://en.wikipedia.org/wiki/Community_Reinvestment_Act
[+] [-] bilbo0s|17 years ago|reply
They contributed by giving real estate developers political and, more importantly, financial cover for redeveloping inner city areas. The areas redeveloped were full of impoverished people, BUT the areas were not redeveloped FOR the impoverished people. Generally, those people were moved out to section 8 housing, (rentals), and new people would come in. People who were decidedly non poor. Then, of course, those people started to default on their mortgages and the rest is history. Witness the downtown condo boom that happened across the US. Then witness the downtown condo bust that is happening presently. Been to Chicago or Miami lately?
So, in short, the developers never sold their condos to "ex-strippers on work release and Taco Bell clerks". They sold them to retirees, empty-nesters, and a crapload of yuppies and speculators. Now the data coming in right now, at least the data for the developer that I worked for, seems to indicate that selling to yuppies and speculators was a mistake. But the gentrification of those neighborhoods was not a mistake, in my own opinion. I know others may think differently.
[+] [-] Slzr|17 years ago|reply