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Dave Spart

Fed Warns On Congressional Scrutiny

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Fed warns on Congressional scrutiny

By Tom Braithwaite in Washington

Published: July 9 2009 21:27 | Last updated: July 9 2009 23:42

The Federal Reserve warned on Thursday that a growing congressional threat to curtail its independence would destabilise markets and raise the cost of servicing US debt for 'current and future generations'

Ron Paul, the Texas Republican, has gathered the support of a majority of the House of Representatives for a bill that would audit the Fed's monetary policy decisions. He told a Congressional hearing he wanted the power to prevent the Fed being 'secret and clandestine and serving special interests'.

The Fed is struggling to face down a political backlash from different parts of Congress amid scepticism over its policies designed to restart the flow of credit and the award of new powers to curb systemic risks.

Donald Kohn, vice-chairman of the Fed, argued at the House financial services subcommittee hearing that any sense of political interference would negatively affect markets. 'Any substantial erosion of the Federal Reserve's monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation' he said.

Not only did Mr Kohn argue that the Fed should be given the power to regulate large systemically significant companies, but he argued against giving up responsibility for consumer protection, asking Congress to overturn the Obama administration's proposal to create a new Consumer Financial Protection Agency.

'I would hope that the Congress might think about whether there are ways of strengthening the Federal Reserve's commitment to consumer regulation as an alternative to creating a new regulator,' he said.

As US authorities have considered how to reform the country's regulatory regime in the wake of the current economic crisis, the Fed has been drawn into an argument with other regulators over who oversees the US's largest financial institutions.

The conflict appeared to end with the Obama administration giving power over systemically significant insitutions to the Fed, with additional oversight from a council of regulators including the Federal Deposit Insurance Corporation.

But critics in Congress have not given up an attempt to push all or more of the power to the council, taking it away from the Fed. The hearing on Thursday heard support for that view. Mr Paul's audit bill now has more than 250 co-sponsors.

You've got to love the cheek in the opening sentence :

The Federal Reserve warned on Thursday that a growing congressional threat to curtail its independence would destabilise markets and raise the cost of servicing US debt for 'current and future generations'.

Yeah, I mean, if those pesky tax payers got to know how their fiat currency gets manipulated - geez, just think - there could be a financial crisis and everything.

Edited by Dave Spart

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The free market needs secrecy, I mean how else is it meant to function?

What they really mean is if you keep asking awkward questions we'll have to take the 5th or admit to being crooks.

I wonder what the market reaction would be if Bernanke refused to answer and took the 5th?

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I wonder what the market reaction would be if Bernanke refused to answer and took the 5th?

A global thermo-nuclear schizoid episode to make last year's panic look like a Sunday School picnic. :lol:

Edited by Dave Spart

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anyone remeber this:

http://www.bloomberg.com/apps/news?pid=206...id=aatlky_cH.tY

Nov. 10 (Bloomberg) -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

bunch of *****

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I reckon the vaults of the Fed are either:

A : A doctor evil-esque compound, filled with buzzing computers and a round table filled with evil incarnate minions reporting to the Bernanke.

B : Bernanke tossing darts to create the next quarters inflation and QE sums.

C : Empty

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The Federal Reserve warned on Thursday that a growing congressional threat to curtail its independence would destabilise markets and raise the cost of servicing US debt for 'current and future generations'

Donald Kohn, vice-chairman of the Fed, argued at the House financial services subcommittee hearing that any sense of political interference would negatively affect markets. 'Any substantial erosion of the Federal Reserve's monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation' he said.

:lol::lol::lol::lol::lol::lol:

US_Dollar.jpg

7auQEXTWomA

http://www.youtube.com/watch?v=7auQEXTWomA

post-2696-1247254119_thumb.jpg

Edited by lowrentyieldmakessense(honest!)

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The Federal Reserve warned on Thursday that a growing congressional threat to curtail its independence would destabilise markets and raise the cost of servicing US debt for 'current and future generations'

reminds me of another quote:

Do not arouse the wrath of the great and powerful Oz...Pay no attention to that man behind the curtain.

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Yep, you have to wonder if it was meant as a veiled threat.

"Thou shalt not tempt The Fed, your God"

From the Book of Revelations, I believe.

Edited by Dave Spart

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