Tag Archives: fed

Federal Reserve Bank of Dallas Advises We Must End Too Big to Fail – Now!

Dodd-Frank Perpetuates Too Big To Fail (TBTF): More Change We Believed In
Even the Fed is admitting that Dodd-Frank perpetuates rather than regulates the “Too Big To Fail” banking corporations that continue to rape and plunder America and the global economy.

FEDERAL RESERVE BANK OF DALLAS ADVISES WE MUST END TOO BIG TO FAIL – NOW!

The following is a letter from Richard W. Fisher, President and CEO of the Federal Reserve Bank of Dallas:

If you are running one of the “too-big-to-fail” (TBTF) banks – alternatively known as “systemically important financial institutions,” or SIFIs – I doubt you are going to like what you read in this annual report essay written by Harvey Rosenblum, the head of the Dallas Fed’s Research Department, a highly regarded Federal Reserve veteran of 40 years and the former president of the National Association for Business Economics.

Memory fades with the passage of time. Yet it is important to recall that it was in recognition of the precarious position in which the TBTF banks and SIFIs placed our economy in 2008 that the U.S. Congress passed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) [Public Law 111-203]. While the act established a number of new macroprudential features to help promote financial stability, its overarching purpose, as stated unambiguously in its preamble, is ending TBTF.

However, Dodd–Frank does not eradicate TBTF. Indeed, it is our view at the Dallas Fed that it may actually perpetuate an already dangerous trend of increasing banking industry concentration. More than half of banking industry assets are on the books of just five institutions. The top 10 banks now account for 61 percent of commercial banking assets, substantially more than the 26 percent of only 20 years ago; their combined assets equate to half of our nation’s GDP. Further, as Rosenblum argues in his essay, there are signs that Dodd–Frank’s complexity and opaqueness may even be working against the economic recovery.

In addition to remaining a lingering threat to financial stability, these megabanks significantly hamper the Federal Reserve’s ability to properly conduct monetary policy. They were a primary culprit in magnifying the financial crisis, and their presence continues to play an important role in prolonging our economic malaise.

There are good reasons why this recovery has remained frustratingly slow compared with periods following previous recessions, and I believe it has very little to do with the Federal Reserve. Since the onset of the Great Recession, we have undertaken a number of initiatives – some orthodox, some not—to revive and kick-start the economy. As I like to say, we’ve filled the tank with plenty of cheap, high-octane gasoline. But as any mechanic can tell you, it takes more than just gas to propel a car.

The lackluster nature of the recovery is certainly the byproduct of the debt-infused boom that preceded the Great Recession, as is the excessive uncertainty surrounding the actions – or rather, inactions – of our fiscal authorities in Washington. But to borrow an analogy Rosenblum crafted, if there is sludge on the crankshaft – in the form of losses and bad loans on the balance sheets of the TBTF banks- then the bank-capital linkage that greases the engine of monetary policy does not function properly to drive the real economy. No amount of liquidity provided by the Federal Reserve can change this.

Perhaps the most damaging effect of propagating TBTF is the erosion of faith in American capitalism. Diverse groups ranging from the Occupy Wall Street movement to the Tea Party argue that government-assisted bailouts of reckless financial institutions are sociologically and politically offensive. From an economic perspective, these bailouts are certainly harmful to the efficient workings of the market.

I encourage you to read the following essay. The TBTF institutions that amplified and prolonged the recent financial crisis remain a hindrance to full economic recovery and to the very ideal of American capitalism. It is imperative that we end TBTF. In my view, downsizing the behemoths over time into institutions that can be prudently managed and regulated across borders is the appropriate policy response. Only then can the process of “creative destruction” – which America has perfected and practiced with such effectiveness that it led our country to unprecedented economic achievemen – work its wonders in the financial sector, just as it does elsewhere in our economy. Only then will we have a financial system fit and proper for serving as the lubricant for an economy as dynamic as that of the United States.

Source of this letter:

http://dallasfed.org/assets/documents/fed/annual/2011/ar11a.pdf

The entire essay, “Choosing the Road to Prosperity: Why We Must End Too Big to Fail Now”, by Harvey Rosenblum:

http://dallasfed.org/assets/documents/fed/annual/2011/ar11b.pdf

Public Law 111-203:

http://www.gpo.gov/fdsys/pkg/PLAW-111publ203/content-detail.html

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TIME TO END TOO BIG TO FAIL! TIME TO END THE FED AS WELL!

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Who Actually Owns the Fed and Why That Must End

Who Actually Owns the Fed and Why That Must End

Few questions of late have been asked more frequently or answered with less transparency than this one:

WHO OWNS THE FED?

The domain name for the official website is FederalReserve.gov, the “.gov” extension of which suggests that the Federal Reserve System (a.k.a. the “Fed”) is part of the United States government and therefore owned by the American taxpayers.  But that is not the case.  As the Fed itself states…

“The Federal Reserve System fulfills its public mission as an independent entity within government.  It is not ‘owned’ by anyone and is not a private, profit-making institution.  As the nation’s central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.”

http://www.federalreserve.gov/faqs/about_14986.htm

Parts of that statement are true, sort of, and parts of that statement are not.  Factcheck.org provides a better answer:

“There are actually 12 different Federal Reserve Banks around the country, and they are owned by big private banks.  But the banks don’t necessarily run the show.  Nationally, the Federal Reserve System is led by a Board of Governors whose seven members are appointed by the president and confirmed by the Senate…  The concept of ‘ownership’ needs some explaining here, however.  The member banks must by law invest 3 percent of their capital as stock in the Reserve Banks, and they cannot sell or trade their stock or even use that stock as collateral to borrow money. They do receive dividends of 6 percent per year from the Reserve Banks and get to elect each Reserve Bank’s board of directors.  The private banks also have a voice in regulating the nation’s money supply and setting targets for short-term interest rates, but it’s a minority voice. Those decisions are made by the Federal Open Market Committee (FOMC), which has a dozen voting members, only five of whom come from the banks. The remaining seven, a voting majority, are the Fed’s Board of Governors who, as mentioned, are appointed by the president.”

http://www.factcheck.org/2008/03/federal-reserve-bank-ownership/

That’s a better answer, but not a totally complete or correct one.  Yes, there are 12 Federal Reserve Banks, all of which are owned by private banks, and all of which must pay dividends to their owners.  So contrary to what it claims, the Fed is not only privately-owned but a for-profit enterprise.  And yes, there *should* be 7 members of the FOMC appointed by the government and 5 appointed by the banks.  In fact, however, for unstated reasons and for some time now there have been only 5 people seated on the FRB Board of Governors, none of whom are celebrated consumer advocates…

http://www.federalreserve.gov/aboutthefed/default.htm

…which means government appointees do NOT outnumber bank appointees on the FOMC, and you can rest assured that the private banks DO “run the show”:

http://tinyurl.com/6346ltz

So the question then becomes:

WHICH PRIVATE BANKS CONTROL THE FED?

The Web is awash with lists and percentages on this one supported by nothing more than links that refer to other links that refer back to the original and often anonymous post.  A notable exception is the work of Jake Towne, who in March of 2009 applied an admittedly imperfect but plausible engineering approach to the problem and, after some extensive research and number-crunching, concluded the following:

“[The] top 4 banks – Bank of America (BAC), JP Morgan Chase, Citigroup, and Wachovia – would control roughly 50% of the stock of the Federal Reserve Bank, and the top 10 banks, including Wells Fargo (WFC), HSBC (HBC), and the Bank of New York (BK), would control over 68% of the stock.”

http://seekingalpha.com/article/123381-who-owns-the-fed

So according to Jake, whoever ultimately controls these ten banks thereby also controls the Federal Reserve:

Bank of America Corp.
JPMorgan Chase & Co.
CitiGroup
Wachovia Bank (subsequently acquired by Wells Fargo)
Wells Fargo N.A.
US Bank
State Street Corp.
HSBC Bank
Suntrust Bank
Bank of NY Mellon

TO RECAP…  The Federal Reserve System that has used its debt-based currency to exploit our economy since 1913 is a private banking cartel consisting of 12 regional Federal Reserve Banks.  Each of those banks are required to pay dividends to their shareholders, which makes them for-profit enterprises.  Those shareholders are all private banks and obviously also for-profit enterprises that exist not to maintain the welfare of humankind – or even the American subset thereof – but rather to maximize the wealth of their shareholders.

AND WHO ARE THEIR SHAREHOLDERS?

Keep tracing your way up the ownership pyramid, and you may find some have (in)famous names like Rothschild, Rockefeller or Buffett.  Others in this global elite we collectively refer to as “the 1%”.  Either way, their interests align with those of the rest of us – “the 99%” – only in the same manner as those of shepherds and the sheep that they shear in good times and slaughter in bad.

This must end.  And that is why the Fed must end.

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http://tinyurl.com/kleptocracytutorial

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