There once was a time when the Federal Reserve abhorred the idea of monetizing debt. That day is long over.
In the second quarter, the most recent for which data is available, the Fed bought $164 billion out of the $339 billion in net new Treasurys sold.
In the mortgage-backed debt markets, the Fed has been buying upward of 80% of the bonds issued by agencies such as Freddie Mac and Fannie Mae.
ZeroHedge helps to put this number into perspective.
the Fed was a greater factor in UST demand than all three traditional players combined: Foreigners, Households and Primary Dealers, which amounted to a $158 billion in net Q2 purchases.
Policies that set the pay for tens of thousands of bank employees nationwide would require approval from the Federal Reserve as part of a far-reaching proposal to rein in risk-taking at financial institutions.
The Fed's plan would, for the first time, inject government regulators deep into compensation decisions traditionally reserved for the banks' corporate boards and executives.
I've often wondered what it would be like to be a graduate student of some economists who clearly are not in statistical reality and often mathematical reality. Would you not be allowed to get your dissertation accepted unless you group speak the party line, regardless of what your own research tells you?
A Huffington Post article, Priceless: How The Federal Reserve Bought The Economics Profession, details a similar situation with Economics Academia and the Federal Reserve big brother club. It seems the Fed has a lock on getting published, a critical issue if one expects to receive their PhD. No publications, no graduate degree and assuredly no tenure in Academia.
The Fed's Intolerance For Dissent
When dissent has arisen, the Fed has dealt with it like any other institution that cherishes homogeneity.
This little tidbit from the Fed almost slipped through without notice yesterday.
The Federal Reserve purchases fixed-rate, non-callable, senior benchmark securities issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Prior to August 31, 2009, purchases were focused on off-the-run securities in that category. Going forward, purchases will include on-the-run securities in that category. This change represents a technical adjustment designed to mitigate market dislocations and to promote overall market functioning. Over the course of the program, the Federal Reserve may change the scope of purchasable securities.
It was only a month ago that the Fed was monetizing treasury notes via the back door.
It seems a few in Congress are really wondering why Goldman Sachs is being enabled to gamble with taxpayer money and how it is they were given exemption to the normal rules to limit risks of bank holding companies. Will Congress get a Dear John Letter in response?
Ben Bernanke Chairman Federal Reserve System 20th Street & Constitution Avenue, NW Washington, DC 20551
Looks like a moment of sanity is emerging from the House Financial Services Committee. Chair Barney Frank is quoted as saying the Federal Reserve will not be given regulatory expansion powers, instead, a super council of existing regulatory agencies, including the Federal Reserve will oversee systemic risk.
The Obama administration’s plan to expand the Federal Reserve’s powers to oversee financial firms is failing to win supporters in Congress as some lawmakers back a proposal to give the responsibility to several regulators.
“It’s going to be shared authority,” House Financial Services Committee Chairman Barney Frank, whose panel will write the measure, told reporters July 21, without providing details.
It's quite long, goes over some of the history of the Federal Reserve but I want to point out Greider's 6 reasons why the Federal Reserve should not be made systemic risk regulator.
Ron Paul: All we have to say is, what do they have to hide?
When Ron Paul's bill to audit the Federal Reserve was blocked through a parliamentary procedure, some people had to ask - what is so wrong with auditing the Federal Reserve?
The question reminded me of something. So I dug through my old writing and found this little gem that has never been fully explained to me.
(Bloomberg) -- Last week the New York Federal Reserve made what may go down as the most misguided move in the history of the Federal Reserve system. They laundered money for North Korea.
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Here is the back story.
Looks like history could be repeating itself. Now we've known for some time that the Chinese were getting weary about buying and holding US-Dollar demominated government securities. They've been pairing back from the longer dated maturity paper to shorter ones.
Slowly but surely, they want to move away from American debt. All that money we've been shoveling their way, a byproduct to our trade imbalance, has gone into things showing their diversification plan, from farm lands in Africa to purchasing major steaks in mining firms to buying precious metals and oil. Now it seems, according to one Li Liangzhong, want to extend into further real estate purchases in the US.
Federal Reserve staff wanted to extract a pound of flesh from Bank of America for the Merrill Lynch acquisition.
So, think all Congressional hearings are sleepy, boring things? Get ready for the House Oversight Committee Hearing tomorrow!
In preparation for tomorrow's testimony by Federal Reserve Chair Ben Bernanke on the shot gun marriage between Bank of America and Merrill Lynch , we have this released memo:
Lawmakers claim to have uncovered evidence that the Federal Reserve tried to hide from other financial regulators its involvement in Bank of America's (BoA) takeover of Merrill Lynch.
, has a new article in The Nation magazine,
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