Tuesday, October 18, 2011

Huffington Post :: Deception and Abuse at the Fed [ comment ]

Deception and Abuse
at the Fed
by Robert Auerbach
Buy It Now
Chairman Bernanke's "Urban Legend" About Deception and Corruption at the Fed

By Robert Auerbach,
Professor of Public Affairs, The University of Texas at Austin

On the same day, October 4, 2011, I testified on Capitol Hill about the terrible record for transparency and corrupt records at the Federal Reserve, its chairman, Ben Bernanke, gave a strong opposing view before the Joint Economic Committee. When Senator Michael Lee (R, Utah) said he was concerned about the "general veil of secrecy under which the Federal Reserve typically operates," Bernanke replied: "That's an urban legend." (Defined as "a bizarre untrue story that circulates in society...")

Bernanke's reply incorporated the Fed's urban legend: "We are thoroughly audited at this point." and "Nobody has found an impropriety." While Bernanke may confine this reply to the partial audit in the 2010 Dodd-Frank law, which the Fed vigorously opposed, the Fed's long history of deception and corruption should not be bypassed.

My testimony on the same day before the Subcommittee on Monetary Policy and Technology of the House Financial Services Committee, chaired by Congressman Ron Paul, reveals a different record from Congressional investigations in which I participated:

Blocking large parts of the Federal Reserve from GAO audits

House Committee on Banking, Finance and Urban Affairs Chairman Henry Reuss (D, Wisconsin) proposed a GAO audit of the Fed in 1976. The Fed orchestrated a massive campaign using the officials of the private banks it regulates to lobby to kill the audit bill. The Fed won. The bill could not garner enough support to pass out of the Committee. It passed the Government Operations Committee two years later, only after glaring no-audit barriers for Fed monetary policy and international operations were added.

Billions of dollars can be made from inside information leaks from the Fed's monetary policy operations. One necessary step to stop leaks is to severely limit inside information on future Fed policy to a few Fed employees.

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