By Pam Martens and Russ Martens: February 26, 2015
Congressman Jeb Hensarling, Chair of the House Financial Services Committee
The Republicans are making good on their campaign pledge to turn up the heat on the Federal Reserve. Sparks flew in the House Financial Services Committee hearing room yesterday as Fed Chair Janet Yellen appeared to present her semi-annual testimony. At times, the exchanges between Yellen and Republican members of the Committee were sharp and tense.
In his opening statement to the Committee, Jeb Hensarling (R-Tx), who chairs the Committee, blamed the “anemic” recovery on Obamacare, Dodd-Frank and regulatory costs. He went on to say that “Then there’s the doubt, uncertainty and regulatory burden that grows as more and more unbridled, discretionary authority is given to unaccountable government agencies. Although monetary policy cannot remedy this, it can help.”
Republicans are locked in some kind of mind warp where the remedy for every problem is to deregulate. Despite six years of books, academic studies, investigative findings, and a 600-page report from the Financial Crisis Inquiry Commission proving that deregulation was responsible for the financial crash of 2008 – the greatest financial implosion since the Great Depression – Republicans refuse to let facts get in the way of pushing for more deregulation.
Democrats on the other hand, despite overwhelming proof that the Dodd-Frank Wall Street Reform and Consumer Protection Act has actually allowed Wall Street to grow systemically more dangerous and more corrupt since its passage, is irrationally wedded to this legislation.
No amount of evidence will change the Democrats’ position on Dodd-Frank. JPMorgan gambling with hundreds of billions of bank depositors’ money in the London Whale fiasco where $6.2 billion got flushed down the toilet will not change their mind. Cartel activity among the big banks in the interest rate market, precious metals market, foreign currency market will not change their mind. Bank chat rooms called “The Bandits Club,” “The Mafia” and “The Cartel,” where brazen market rigging is alleged to have occurred will not change their mind. Endless criminal investigations and multi-billion dollar settlements will not change their mind. Scandal after scandal destroying public trust in Wall Street and its regulators will not change their mind.
Then there is the New York Fed – the least appropriate body in all the world to be simultaneously carrying out monetary policy via instructions from the Federal Open Market Committee with the involvement of the biggest Wall Street banks while simultaneously attempting to engage in regulatory oversight of the same banks. (See related articles below.)
On Tuesday, Senator Richard Shelby (R-Ala), chair of the Senate Banking Committee indicated he is aware of the conflicted role of the Fed in regulating Wall Street banks. In his opening statement prior to Yellen’s appearance before that body, Shelby said:
“Our central bank has expanded its influence over households, businesses and markets in recent years. Not only has it pushed the boundaries of traditional monetary policy, but it has also consolidated unmatched authority as a financial regulator. As the Fed grows larger and more powerful, much of this authority has become more concentrated in Washington, DC and New York.
“The Fed emerged from the financial crisis as a super-regulator, with unprecedented power over entities that it had not previously overseen. With such a delegation of authority comes a heightened responsibility for Congress to know the impact these new requirements place on our economy as a whole.
“The role of Congress is not to serve on the Federal Open Market Committee. But, it is to provide strong oversight and, when times demand it, bring about structural reforms.
“As part of this process, the Committee will be holding another hearing next week to discuss options for enhanced oversight and reforming the Fed.”
Let the hearings begin.
Related Articles:
Blowing the Whistle on the New York Fed and Goldman Sachs
The Carmen Segarra Case: Welcome to New York, Wall Street and McJustice
A Mangled Case of Justice on Wall Street
Is the New York Fed Too Deeply Conflicted to Regulate Wall Street?
New Documents Show How Power Moved to Wall Street, Via the New York Fed
Intelligence Gathering Plays Key Role at New York Fed’s Trading Desk
Relationship Managers at the New York Fed and Citibank: The Job Function Ripe for Corruption
New York Fed’s Strange New Role: Big Bank Equity Analyst
New York Fed’s Answer to Cartels Rigging Markets – Form Another Cartel
