Is Congress really going to stand up to the Federal Reserve? That would be a truly historic event.
December 2, 2009
Berni Sanders Blocks Bernanke Confirmation…
With Bi-Partisan Support
By Press Release
WASHINGTON, December 2 – Sen. Bernie Sanders (I-Vt.) today placed a hold on the nomination of Ben Bernanke for a second term as chairman of the Federal Reserve.
“The American people overwhelmingly voted last year for a change in our national priorities to put the interests of ordinary people ahead of the greed of Wall Street and the wealthy few,” Sanders said. “What the American people did not bargain for was another four years for one of the key architects of the Bush economy.”
As head of the central bank since 2006, Bernanke could have demanded that Wall Street provide adequate credit to small and medium-sized businesses to create decent-paying jobs in a productive economy, but he did not.
He could have insisted that large bailed-out banks end the usurious practice of charging interest rates of 30 percent or more on credit cards, but he did not.
He could have broken up too-big-to-fail financial institutions that took Federal Reserve assistance, but he did not.
He could have revealed which banks took more than $2 trillion in taxpayer-backed secret loans, but he did not.
“The American people want a new direction on Wall Street and at the Fed. They do not want as chairman someone who has been part of the problem and who has been responsible for many of the enormous difficulties that we are now experiencing,” Sanders said. “It’s time for a change at the Fed.”
The Federal Reserve has four main responsibilities: to conduct monetary policy in a way that leads to maximum employment and stable prices; to maintain the safety and soundness of financial institutions; to contain systemic risk in financial markets; and to protect consumers against deceptive and unfair financial products.
Since Bernanke took over as Fed chairman in 2006, unemployment has more than doubled and, today, 17.5 percent of the American workforce is either unemployed or underemployed.
Not since the Great Depression has the financial system been as unsafe, unsound, and unstable as it has been during Mr. Bernanke’s tenure. More than 120 banks have failed since he became chairman.
Under Bernanke’s watch, the value of risky derivatives held at our nation’s top commercial banks grew from $110 trillion to more than $290 trillion, 95 percent of which are concentrated in just five financial institutions.
Bernanke failed to prevent banks from issuing deceptive and unfair financial products to consumers. Under his leadership, mortgage lenders were allowed to issue predatory loans they knew consumers could not afford to repay. This risky practice was allowed to continue long after the FBI warned in 2004 of an “epidemic” in mortgage fraud.
After the financial crisis hit, Bernanke’s response was to provide trillions of dollars in virtually zero-interest loans and other taxpayer assistance to some of the largest financial institutions in the world. Adding insult to injury, Bernanke refused to tell the American people the names of the institutions that received this handout or the terms involved.
“Mr. Bernanke has failed at all four core responsibilities of the Federal Reserve,” Sanders concluded. “It’s time for him to go.”
And a press release from campaign for America’s future reports:
LEFT-RIGHT COALITION CALLS FOR AN AUDIT OF THE FEDERAL RESERVE BEFORE BERNANKE IS REAPPOINTED AS CHAIR
Senate Banking Committee to Hold Bernanke Nomination Hearings Thursday; Issues Raised By Letter Prompt Sen. Sanders To Place Hold On Nomination
WASHINGTON – Leaders on opposite sides of the political spectrum joined forces today on a letter to the Senate demanding that Congress mandate an audit of the Federal Reserve Bank before voting to reappoint Federal Reserve Chairman Ben Bernanke for a second term. Although the groups may not agree on all the elements of financial reform, they do agree that the Federal Reserve should be held accountable to taxpayers.
The left-right coalition sent a letter to members of the Senate today includes Campaign for America’s Future co-director Robert Borosage, Americans for Taxpayer Reform president Grover Norquist, FireDogLake blogger Jane Hamsher, Eagle Forum president Phyllis Schlafly Campaign for Liberty president John Tate and Center for Economic and Policy Research president Dean Baker.
The letter coincides with the announcement that Sen. Bernie Sanders, I-Vt., is placing a hold on the Bernanke nomination for the reasons cited in the joint letter.
The Federal Reserve took extraordinary actions in the financial crisis, committing trillions of dollars to bolster private institutions, and the letter says that these actions must be reviewed before any decision is made on Bernanke’s nomination. Bernanke has opposed a detailed review and has not answered questions from Congress about the trillions of taxpayer dollars the Federal Reserve lent to banks and other private companies.
Bernanke and his supporters have argued that auditing the Federal Reserve would constitute a takeover of monetary policy, but signers of the letter believe this is disingenuous. What is at issue is not monetary policy, but an unprecedented assertion of fiscal authority.
The complete letter follows:
December 3, 2009
Dear Members of the U.S. Senate:
In the last two years, the Federal Reserve Board has lent several trillion dollars to banks and other private companies, financial and non-financial institutions through a series of special lending facilities. The total amount of loans made through facilities exceeds the annual budget of the United States. In addition, it guaranteed trillions of dollars of various assets and also made hundreds of billions of dollars available to several foreign central banks through currency swap arrangements.
At this point, neither the public nor members of Congress has any information about who benefited from these loans, guarantees, and swap arrangements. There is no information available on the specific terms of the loans – the interest rate charged, the collateral posted, and whether or not they were repaid. There is no information available on how it was decided who would qualify for the Fed’s help and who would be denied assistance.
Almost three quarters of the members of the House of Representatives have co-sponsored a bill calling for an audit of the Federal Reserve Board. This audit will allow Congress to assess how the Fed, under the leadership of its chairman Ben Bernanke, performed in this crisis and whether it acted appropriately in its disbursement of an enormous amount of money and guarantees.
Without this audit, Congress lacks the information it needs to evaluate Mr. Bernanke’s performance. Therefore the Senate should delay action on Mr. Bernanke’s reappointment until an audit of the Fed’s books takes place, the results are made available to the Congress and Mr. Bernanke answers a serious inquiry into the actions he took.
Ryan Alexander, president, Taxpayers for Common Sense
Chris Bowers, founder, OpenLeft
Dean Baker, co-director, Center for Economic and Policy Research
Robert Borosage, co-director, Campaign for America’s Future
Danielle Brian, executive director, Project On Government Oversight
Mark Calabria, director of financial regulation studies, Cato Institute
Mark Cohen, executive director, Government Accountability Project
Tom DeWeese, president, American Policy Center
Tyler Durden, founder, Zero Hedge
Sandra Fabry, executive director, Center for Fiscal Accountability
James Kenneth Galbraith, economist
Adam Green, co-founder, Progressive Change Campaign Committee
George Goehl, executive director, National People’s Action
Jane Hamsher, founder, FireDogLake
Gary Kalman, Washington director, Public Interest Research Group
Matt Kibbe, president, FreedomWorks
Grover Norquist, president, Americans for Tax Reform
Duane Parde, president, National Taxpayers Union
Aaron Swartz, co-founder, Progressive Change Campaign Committee
Phyllis Schlafly, president, Eagle Forum
John Tate, president, Campaign for Liberty
John Taylor, CEO, National Community Reinvestment Coalition
Stephanie Taylor, co-founder, Progressive Change Campaign Committee
Robert Weissman, president, Public Citizen
John Whitehead, president, The Rutherford Institute
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