GAO audit reveals massive conflicts of interest at the private Federal Reserve
By End the Lie
A Government Accountability Office (GAO) audit released today revealed systematic conflicts of interest within the Federal Reserve where top executives of financial institutions and corporations directly manipulated and benefitted from Fed policy.
Unfortunately, this is not just one instance, but has become a widespread cancer in the Federal Reserve System where no less than 18 current and former Fed board members were directly tied to banks and corporations that received bailouts and other special treatment from the Fed.
The Federal Reserve has no restrictions whatsoever about directors owning stock or even working directly for banks that are regulated and overseen by the Federal Reserve, which has become commonplace.
Federal Reserve directors have direct ties to major players including General Electric, JP Morgan Chase, Goldman Sachs and Lehman Brothers which the non-partisan report characterized as “reputational risks” to the Fed.
I would say calling it a “reputational risk” is a bit of an understatement.
This is irrefutable proof that the corrupt system of crony capitalism is being used at the highest levels of finance to unfairly benefit the few while emptying the pockets of Americans who don’t happen to be executives at multinational corporations or banks.
Senator Bernie Sanders, an Independent from Vermont, essentially made the audit happen thanks to his amendment to the Wall Street reform law passed last year.
Previously the Federal Reserve System and their criminal practices have never been subjected to any expert independent inquiry of this caliber, which is likely why they have been able to get away with this for so long.
“Clearly it is unacceptable for so few people to wield so much unchecked power,” Sanders said. “Not only do they run the banks, they run the institutions that regulate the banks.”
They leverage this unchecked power to benefit themselves and corporate interests and while most central banks have rules preventing such direct and glaring conflicts of interest, the Fed has none to speak of.
Sanders harkened to the Occupy Wall Street movement in saying “This is exactly the kind of outrageous behavior by the big banks and Wall Street that is infuriating so many Americans”.
To ameliorate this situation Sanders said that he will be working with prominent economists to craft legislation to restructure the Federal Reserve System and help prevent the banking industry for hand-picking Federal Reserve directors as they currently do.
Currently the banking industry enjoys the considerable power of being able to both elect and serve as directors of the Federal Reserve and use this power to benefit their own interest to the detriment of America and our economy.
Federal Reserve directors with direct conflicts of interest are also allowed to participate in making key decisions like how much interest is charged to financial institutions and how much credit is given to banks in both healthy and “hazardous” conditions.
In the rare case that situations breach the Fed’s lax (to nearly non-existent) conflict of interest rules, waivers are granted to the offending parties so they can continue on with their corrupt practices.
According to the GAO, these waivers are kept hidden from the public, including in the instance of Stephen Friedman who sat on the board of directors for Goldman Sachs while being the chairman of the New York Fed.
In 2008, Friedman’s branch of the Fed allowed Goldman Sachs to become a bank holding company which gives them direct access to cut-rate loans from the Federal Reserve.
Unsurprisingly, this is the same period in which Friedman sat on the board of Goldman Sachs, owned stock in Goldman Sachs and continued to do so from November of 2008 to January of 2009 without the Fed knowing, according to the GAO audit.
While these practices are clearly corrupt, the Federal Reserve issued Friedman a waiver in late 2008 which was, of course, hidden from public scrutiny.
Another individual targeted in the report is Jeffrey Immelt, General Electric’s CEO and chairman of the board who was also a director of the board of the Federal Reserve Bank of New York.
Under Immelt, the Fed provided $16 billion in funds to General Electric under the emergency loan program and consulted with GE on the creation of the Commercial Paper Funding Facility.
Then there’s Jamie Dimon, CEO of JP Morgan Chase who also served on the board of the Federal Reserve Bank of New York.
Dimon served on the New York Fed’s board when JP Morgan Chase was used as a clearing bank for the Fed’s emergency loan programs, then in 2008 JP Morgan Chase received a whopping $29 billion from the Fed to purchase Bear Stearns.
Simultaneously Dimon got the Fed to give JP Morgan Chase an exemption from risk-based leverage and capital requirements for 18 months while also taking risky mortgage-based assets off of Bear Stearns’ hands before JP Morgan Chase acquired it.
This is just another piece of proof, among the mounds of evidence including their involvement with the Bank of America trying to put off derivative exposure on to the taxpayer via the FDIC, which shows that the Federal Reserve is a corrupt organization run by self-serving criminals who have no problem stabbing their fellow countrymen in the bank in the name of greed.
I highly recommend you take in this information, spread it around as much as humanly possible and inspire others to take a stand against the corporate-government-banker plutocracy that is running our country into the ground.