On Wednesday, May 6, Marcy Wheeler and I interviewed Chris Dodd in his offices on Capitol Hill. Dodd was very forthcoming about a number of issues, including the AIG bonuses, the influence of lobbyists on the defeat of cramdown, credit card interest rate caps, and a new Pecora Commission.

One of the things we discussed was the refusal of Fed Vice Chair Donald Kohn to answer Alan Grayson’s question in a House Financial Services hearing when the Florida Representative asked him to name the banks that the Fed was lending to. Bloomberg estimates that the US government and the Fed have now lent, spent or committed $12.8 trillion dollars in financial rescue, up 73% from November, when they estimated the amount to be $7.4 trillion.

The Senate recently passed the Grassley Amendment, which gives the General Accounting Office (GAO) limited authority to look into specific loans made to BofA, JP Morgan, Bear Sterns, AIG and the Maiden Lane facilities.

Dodd expressed concern that the Fed needs to stay independent of the government in order to set monetary policy independent of political pressure. The GAO is Congress’s auditing arm, and under law they have been restricted from auditing the Fed. But as Grassley says, things have changed:

Perhaps those restrictions could be defended back when the Federal Reserve focused only on monetary policy. However, today it is routinely exercising extraordinary emergency powers to subsidize financial firms far above the levels Congress is willing to authorize through legislation. The Federal Reserve is taking on more and more risk in complicated and unprecedented ways. That risk is ultimately borne by the American taxpayer.

As Chairman of the Banking Committee, Dodd has been one of the most aggressive members of Congress in pushing for oversight of the government’s rescue of the banking system. He was critical of the loan made by the New York Fed to JP Morgan to purchase Bear Sterns in March of 2008, at the same time JP Morgan CEO Jamie Dimon sat on the NY Fed’s board. Timothy Geithner was head of the New York Fed at the time.

Dodd also clashed with the Treasury when his amendment limiting executive bonuses for TARP recipients passed the Senate, but was scaled back at the Treasury’s request before the stimulus bill finally passed. Senior Administration officials, press secretary Robert Gibbs and the Treasury later suggested Dodd was to blame for the language being changed when the AIG bonuses were paid out, but the Treasury ultimately recanted and admitted its role in the process.

I asked Dodd if he was bitter about that, and he said he felt like he’d been "thrown under the bus." We’ll have more video on that later today.

In this clip, I ask Dodd if he’ll request that the Fed provide the names of the banks it has been lending to. He agreed. It will be an important step in the transparency process if the Fed will provide to Congress the names of these banks.


Related posts:

  1. The Next Big Taxpayer Bailout? IMF Could Get Hundreds of Billions for European Banks
  2. Bank Bailout: When a Bonus Exceeds Earnings, How is It Not Fraud?
  3. Sen. Dodd Releases Financial Reform Draft
  4. Banks Profit While Loans Drop
  5. Barofsky Report: What Happened to All That TARP Money?