Welcome Alan! Congratulations on your election.

Welcome back Rep. Grayson!

And truly nice smackdown to the Fed rep who tried the dodge act.

Greetings Rep. Grayson and thanks for taking the time to be with us!

My question: How in the world do you expect to get the Fed to answer, given all the ignored congressional subpoenas, requests, and court orders floating about that have resulted in nothing?

Boxturtle (Also given the fact that your capitol cellar jail cell appears to be remodeled out of existence)

Congressman Grayson — WOW, does that sound great! — thanks so much for joining us today and congratulations on a wonderful debut at the Banking Committee hearing. Do you have assurances from Chairman Frank that you’ll get an opportunity to pursue these same questions when Chairman Helicopter Ben shows up next week?

Thanks very much for your service, and thank you to your family for the sacrifices they are making on behalf of the United States of America. I look forward to more great things from you.

Thank you for being here, Rep. Grayson, and for doing your job!

Thank you, Rep. Grayson. What in the world is going on?

Are you willing to jail these Fed guys if they do not answer you in Congress otherwise they will just hide behind lawyers.
If my banker can’t tell me where my cash is let alone give it to me I would call the cops on him.

Greetings, Rep Grayson. Welcome back to the Lake. I happened to catch that exchange on C-Span and am wondering just what kind of leverage Congress has to force the Fed to release this information. Our experience in the past has been that Congress takes no action even when it is readily apparent that someone has lied to whatever committee they’re appearing before.

Just heard from Grayson’s schedule guy – he’s been called away and is on a flight. However, he’s going to be reading this thread, and would like your questions, so that he can put them directly to the Fed officials when hearings start.

Geex, the first three questions are all basically the same. I sense a trend….:-)

Boxturtle (Tip O’Neil (sp?) would never have waited this long for HIS paperwork!)

Bloomberg news filed a lawsuit to find out who the fed lent the money to. And still has not gotten a reply:

At the very least if they don’t answer freeze the paychecks of all the Fed people let the GOP argue against that the press will have a field day.

Congress Controls the budget use the power.

Here’s what Rep. Grayson is doing: there are big questions about what the Federal Reserve has been doing. Normally the Fed buys Treasuries from banks and write them a check – this takes government debt out of circulation, and puts dollars into circulation. However, in the last year the Fed has been buying all sorts of things, and has not even told Congress what it has been doing with it.

Grayson asked direct questions, and the Fed VP would not answer.

Out in the financial world, there is the belief that the Fed has been buying assets that it really should not, and that the present enthusiasm for a “bad bank” is to give the Fed someplace it can legally sell the toxic waste piling up on it’s balance sheets.

But no one outside the small circle of people involved really know.

Congress has search crews out lookin’ for the million ton shit hammer.

But no one outside the small circle of people involved really know.

You’ve got 4 days left to waterboard. [Moderator: asking you to refrain from advocating violence]

Boxturtle (Stop asking the fed. Call the heads of the receiving firms and ask them what they sold)

Tiger Woods, the world’s most famous asian golfer, to speak at the inaugaration..

I watched that clip – my favorite of the Congressman’s questions – “who gave you the authority to [promise confidentiality to recipients of $$$]?”

The arrogance of the Fed Chairman. “yes,” he says then goes on to expand as if he’d said “no”–the people are entitled to know categories of spending, and a bunch of such vague s–t that I can’t remember what he said. But the names of the recipients, the amounts given to them – that nobody should know or the banks (?) might not borrow. Awwww.

Foothills

Kohn’s non-responses the other day certainly smell like they’ve got some things they really don’t want people to know. Not because it will further damage the economy but because it will damage/destroy people’s reputations involved in the process. The Fed saved the portfolios of their rich cronies and are scared to death they’re going to have reveal that info. It’s long past time to put an end to crony capitalism.

Oh right. They will tell the truth.

Apologies to the Moderator. That was intended sarcastically, but I neglected the /s.

Boxturtle (Besides, I got a USAG opinion saying it’s legal)

(Stop asking the fed. Call the heads of the receiving firms and ask them what they sold)

But boxturtle – that’s what the Chairman wouldn’t tell him – WHO are the recipients?

But no one outside the small circle of people involved really know.

please excuse my ignorance on these matters, but i don’t think i’m the only one who doesn’t understand…

how can such a big secret (big as in the amount of $$$) be kept to a small circle of people? that just seems astonishing on it’s face – and something that needs to be changed regardless of whether or not it’s being done at this time.

…that nobody should know or the banks (?) might not borrow.

And that has to be one of the most specious arguments they can make. “We must protect their identities or they won’t come begging us for money to bail them out”

Uh, Mr Fed person? If the banks are coming to you and begging for money, that means YOU have the leverage to set the conditions, not them.

I would imagine that the upper Treasury/Fed circle is very small and driven by self interest rather than the common good. Paulson’s main concern has been to ensure the investment banks, Sachs government in particular, covered their losses with tax dollars. We’re talking about people who will go to their grave cheerleading Friedmanomics.

I think even when something is meant as a joke, it is frowned upon. For one example, think of all the “jokes” told by Rust Limpballs and the Coultergeist.

Some folks tend to not get the joke and they are usually in positions of power.

but wouldn’t it be known to people at the banks involved?

To most people at the banks involved, no.

If I had refered to it as “enhanced interrogation techniques”, would I have been okay?

Boxturtle (Refuses to acknowledge the death of sarchasm)

I’d say probably not. And it’s not the death of sarcasm as such. Just that I’m pretty sure that has been standard policy here from the beginning to avoid any hints of violence against a person.

Surely you can convey the same message without resorting to hints of violent activities?

thanks. what can be done to make the secret so hard to keep, people won’t tempted to try? it seems to me that just having the possibility exist is going to negatively affect the trust people have in the system. not that it isn’t close to zero now…

Only the upper echelon and they’re the ones benefiting most. It’s their portfolios that were in the toilet. From what we’ve seen much of the bailout money has been used to pay bonuses and “deferred compensation,” which both Treasury and the Fed says the banks are legally obligated to pay. Lost a ton of money on toxic securities? Here, have a ton of money to buy some that aren’t toxic.

Like the troll on egregious’ diary. Man, that was so over the top.

thank you Rep. Grayson. clearly you are a BETTER democrat such as we have been seeking. i guess my question would be, on what grounds can any official of the fed imagine it is even legal to answer you in this way????

and let me get this straight: they have resurrected a longlost set of rules from the 1930’s? to create some fancy new loophole? give me a break. please.

the fed does not run this country. if that’s not true, change it fast. if so, inform the people who run the fed.

and please, please, please, we need more than stern letters with stern language from congress. now. there’s not much time to demonstrate that the last 8 years have been a terrrible mistake and not part of everyone’s plan.

I missed the troll but that’s probably a good thing. I do wind up sometimes typing a real scathing comment to some looney tune and then delete it since I know it would get modded if I did hit submit.

Save me from myself if you will. (But it does help to get the frustration out)

The troll was talking murder, pure and simple.

He must not have known that we’re just a bunch of Dirty Ef’fin Peace lovin’ pacifist Hippie type freaks.

Or somethin’ like that.

I know how you feel. I’ve had to rewrite entire comments because they were just too foul. Hones my sarcasm skills, though. *g*

Out of curiosity, selise, what do you think might happen if ‘trust’ bottoms out?

Shock and disbelief?

Some form of citizen ‘action’?

Reassurances from the Ruling ClA$$e$* that the ‘foundations’ of the (plug in term) economy … society … social contract … etc “are solid and firm …

Or, essentially ‘nothing’, as people hunker down for ‘worse’ and the fear mongers play upon doubt, worry, and the fearful realization of impending calamity?

*America’s Own Ari$tocracy and most of the Political Cla$$, both D abd R.

We’ve had to invent whole new categories of profanity for some of the things that are going on. A pervasive disrespect for the rule of law that is the hallmark of Bush’s time in office seems to loosen even the most staid of tongues.

I said on Spencer’s post that we need to set up a troll alert system whenever Lady Jane goes on teebee. She appears on da toob and the trolls come out of the woodwork, like FL cockroaches.

Right now there is a credit freeze precisely beacause trust has broken down so completely.

Good question. I don’t see a lot of “trust” in government right now. The neocons and their blind followers have sucked up every dollar they can under the “free market” meme. If, at high noon and it’s 100 outside, somebody from the govt tells me the sun is out I go outside and look for myself.

Well, most of them are so obvious in their responses that it really is difficult to not feel sorry for them.

Unarmed in a battle of the wits yet thinking that they are the ones getting over and making sense.

It usually doesn’t take most of them long to find out they’re waaaaaaay in over their head here.

The media don’t cover it so there is no spotlight put on these dealings. Think about every detail relevant and irrelevant that was covered with regard to the auto bailout and then look at the silence in the face of actions by the Fed that involve hundreds of billions even trillions of dollars. Consider if equal attention had been given to the Fed. Even if it had tried to stonewall, the stonewall would have become the story and just made the story even bigger. And the wall would have crumbled. But there is a reason why they want to hide all this stuff.

Almost no one outside of maybe us here realize that Paulson’s plan to buy up crap assets was sidelined because the Fed was doing the same thing with far more money, far greater secrecy, and far less accountability. The key in all this is not to look at the real value of crap assets. It’s all a game of financial kabuki. The banks are insolvent. Their assets aren’t worth what they say they are, not even close to what they say they are. But as long as everyone pretends they are worth something then the Fed will treat them at full face value. The last thing any of them want is for somebody to come in and force either the banks or the Fed to admit publicly what is going on. The Fed would have to confess it has broken the law but knowingly accepting crap for dollars, and the banks would have to acknowledge their insolvency. It is the emperor’s new clothes all over again. As long as no one states the obvious, they hope to keep the whole thing going, not fix it, not reform it, just keep it going. It’s a deadend strategy but these are the same people who created the meltdown in all of its ignominious glory.

Out of curiosity, selise, what do you think might happen if ‘trust’ bottoms out?

two things:

1) if the distrust is even a little bit localized, a run – as we saw in the middle of september with the money markets, but instead of a few institutional managers (who are easier to manipulate talk down) it would be the masses (ie us).

3) if the distrust is more diffuse, it won’t matter unless, and this is a big “unless,” people see their lives changed dramatically and quickly.

my 2 cents.

Gotta run an errand. Later.

Namaste

—–New Post—–>

Almost no one outside of maybe us here realize that Paulson’s plan to buy up crap assets was sidelined because the Fed was doing the same thing with far more money, far greater secrecy, and far less accountability.

i don’t think it would have ever occurred to me. but you’ve been writing about this for months, and of course it makes so many pieces of the puzzle fit that it seems obvious now (after having it pointed out a few dozen times *g*). for example, that bullshit story from npr’s planet money on how the tarp bill got modified (which makes me think that barney franks must know, or at least have a good clue, what’s going on).

so yes, what must be done now is to talk about it so much and in such a way that the M$M won’t be able to ignore the story. representative grayson has done a lot to advance the story – we can’t let up now.

It’s all a game of financial kabuki. The banks are insolvent. Their assets aren’t worth what they say they are, not even close to what they say they are. But as long as everyone pretends they are worth something then the Fed will treat them at full face value. The last thing any of them want is for somebody to come in and force either the banks or the Fed to admit publicly what is going on. The Fed would have to confess it has broken the law but knowingly accepting crap for dollars, and the banks would have to acknowledge their insolvency. It is the emperor’s new clothes all over again. As long as no one states the obvious, they hope to keep the whole thing going, not fix it, not reform it, just keep it going. It’s a deadend strategy but these are the same people who created the meltdown in all of its ignominious glory.

The assets are worth something substantial. It’s the mortgages (the toxic part of ‘toxic assets’) which are pretty much worthless.

Having to publicly state the value of those mortgages would be difficult since the asset backing them changes values daily and if the CDOs are ‘insured’ with Credit Default Swaps, then they truly do have value more than your implied ZERO.

The Fed has no problem (I wouldn’t think) admitting is has paid good money for toxic assets. The question for them, as a white knight, is whether they can fix those mortgages or refi them into something solid and resalable. It isn’t breaking the law for them to buy toxic assets. It was what they were originally supposed to do. The big problem is they can’t buy ALL of them to remove them from the public sector. So, instead, these bad mortgages have to be handled over time.

I don’t see them wanting to ‘keep it going’. It just that the Bush administration and banks have done what they could to prevent it from being fixed (see Sheila Bair’s FDIC program Paulson nixed). Actually, I think Bernanke is doing everything he can to fix problems and Obama’s team will join with him in that effort very soon. We might even see Bair’s plan go into effect since she’s been kept at FDIC.

A more important two-part question is this. Are people coming to fear their own government’s intentions per se, or are they still in the stupor of shock and unable to clearly imagine ANY way ‘forward’ that will not result in more pain and loss?

People are definitely hoping that Obama has some decent ‘answers’, but many are beginning to worry that it will be more of the same old, same old.

The loss of trust in the financial system ought to lead to some thought regarding other things where ‘trust’ plays a role, from politics to military ‘adventures’.

My guess is that cogitation is definitely occurring, but that the visions of the future that are being offered, or will be offered, will be pinched and narrow, if not outright demogogic in nature.

This is the time to very seriously start sharing visions of a sustainable future, wherein it is recognized that humans do create their own times and that it is therefore incumbent upon us, all of us, to do so with the most courageous imagination and humanity that we can muster, or else the moment will be co-opted by the calculating and epiphitic sociopaths.

The recent financial ‘coup’ as Harvey aptly defines it, suggests that the neoliberals are still ‘winning’. Clearly they asre willing to destroy the world in order to have their own way.

People everywhere understand that.

Never, in my life, have I witnessed as much understanding.

It would be a terminal pity to let it go to waste.

Only the upper echelon and they’re the ones benefiting most.

i have a cousin who’s an accountant and works at a very big company – not a bank though, but one that does lots of business with the gov (mic). i’m going to ask him if that kind of thing could be kept from from the internal accountants who are responsible for reviewing the books. may not know, but will have a better clue than i.

Representative Grayson should be commended for taking a stand that many of us knew would have to come sooner or later. Change. It’s what most of us are looking for but in increments that don’t short circuit our brains all at once. I have written here at Firedoglake for over two years about exactly what is going to happen and now the trial baloons have been set afloat. Yesterday, both the LA and NY Times papers ran stories on the nationalization of US banks.
To hear some say that this is an afront to free market capitalisim, that the government should not be in a position to change the banking paradigm only shows how little we as a society know not only about our government but about banking as well.
In the last paragraph of a piece that was posted by a financial commentator, he says….“We are down a path that this country has not seen since Andrew Jackson shut down the Second National Bank of the United States,” Folks, this is as it should be. We as a people have been brian washed for nearly 100 years in believing that a private banking cartel was what was required in order for a country to grow. The creation of the Federal Reserve in 1913 was the ultimate move in removing the power of money from the people. To add insult to injury, along with the Federal Reserve in 1913 the I.R.S. was also created.
Whether Jackson, Jefferson, Lincoln or Kennedy, each of these men knew that giving the creation and control of money to private bankers would destroy our country and what is happening today is all the proof one requires of that fact.
Both the Fed and the US Treasury have purchased nearly 8 trillion worth of junk paper that no one else in the world wanted. The American tax payer has now become the lender of last resort and in doing so, we now own large stock positions in the major banks that make up the Federal Reserve. There is one little problem though. There is still another 742 trillion worth of OTC derivatives out there looking for a home and there isn’t any way for these numbers to be reconciled as there aren’t enough printing presses in the world to cover that debt.
Obama does have an incredibile opportunity at hand to finish the job that the current administration has set forth and this goes back to the founding of our country.
The Constitution calls for a US Treasury with dollars backed by gold and silver. Soon after taking office, Obama will have no other choice but to revalue our current gold holdings which are now as far as Congress is concerned only worth $42.50 an ounce compared to the $840 an ounce the rest of the world says it is worth. That will be the first step. The second soon to follow with be the nationalization of the major banks which in turn will create a new treasury banking system with dollars once again backed by hard assetts rather than smoke and mirrors.
I sincerely hope that Obama is full of surprises, but from a fundemental banking perspective, you can’t keep asking the world to fund our debt when you have a currency that isn’t worth the paper it is printed on. The rest of the world has caught on to our game and have said no more. Your T-bills are worthless because they are anchored in debt financing, not hard assetts. This will take time to complete, but once it does, the American people will no longer be slaves to a private banking cartel that has literally sucked the life out of us as well as the country. If the US does not change, it will have change forced down its throat by the rest of the world who will no longer accept dollars as a means of trade.
We either change the banking system now having the opportunity to do so, or change will be forced on us through a depression that will make 1929 look like a lawn party. The choice is literally ours and this opportunity should not be missed to correct a wrong that is nearly 100 years in the making.

Very well said, indeed.

Thank you, gs.

DW

No and no. You could own a goldmine but if no one is buying goldmines your goldmine is worth pretty much nothing. You are confusing the underlying physical asset with the financial instrument (the mortgage) and these with the derivative CDOs based on them. But the principle is still the same. If you have a goldmine that you can’t sell, it is worth essentially nothing, any mortgage written on it is worth nothing, and any CDOs written off it is also worth nothing.

There are 3 prices you need to keep in mind in all this. There is the face value. So if you got a million dollar mortgage on your mine, its face value would be $1 million.

There is the mark to market price. In a fully illiquid market for goldmines that reflected today’s housing market, this would be worth between zero and 25 cents on the dollar so we could say that at most your goldmine was worth $250,000.

Finally, if there had been a bubble in goldmines like our housing bubble, the real value of your goldmine pre-bubble would be about $600,000.

The problem we currently face is that banks are acting like their assets are worth their mark to market prices but are getting face value for them in their dealing with the Fed and Treasury.

A bank nationalization would allow the government to force banks to declare their insolvency and the value of their toxic assets at whatever value the government named. For me, the best assessment is the pre-bubble price. This would allow the government to recapitalize banks in a transparent way. It could use them to refinance mortgages at pre-bubble prices. It could get them to re-initiate normal lending practices eliminating the credit crunch, and it could break them up to prevent entities which are too monopolistic and too big to fail.

Daily fluctuations in the valuation of CDOs would be irrelevant to this process. Again you have to keep in mind that things are only worth what people are willing to pay for them and the only real buyer at the moment is the US government and the Fed.

Oh lord, Brooks is on NPR. Obama is intensely empiricist. And oh yes, joy he is going after entitlements. What is so obscene about our media scene is how they keep validating these fools.

George W. Bush’s Federal Reserve.

It’s important to note that all Bush really did was look at a list of approved candidates to replace Greenspan and pick one. The Fed’s chairmanship is not like any other political appointment. The list of candidates is created from the Fed’s board of governors (The shareholders of the bank), and given to the president to pick one. Most likely the president’s involvement is just a formality as there is only one person on that approved list. The Federal Reserve is completely independent of the Federal Government – there are plenty of laws on the books to keep it that way. For example, the Congress has no power to audit the Fed, nor does the Fed have to get any congressional approval to print money. Here is Rep. Ron Paul pointing that out in the exact same hearing.

Why on earth are they obligated to pay bonuses in such a strained financial environment? Deferred compensation might be legitimate, but bonuses?