Congress pushed for an audit of the Federal Reserve. They wanted to know what was going on behind closed doors. The Fed wasn’t crazy about that, but the lost on that one. The result? Well, how about over $16 trillion in bailouts that the American public didn’t know a damned thing about for starters?
That’s right folks, $16 trillion was “loaned” out at 0% interest to corporations and national banks throughout the world. It hasn’t been paid back. So what’s the big deal? Here’s an analysis of what we’re talking about:
To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.
Keep in mind that the Federal Reserve isn’t exactly a private bank. It’s a semi-private bank that’s in charge of massive amounts of the United States economy. In addition to acting as a bank, loaning money to other banks that permits them to loan it to us, it also lists the following as among it’s function.
The Federal Reserve has responsibility for supervising and regulating the following segments of the banking industry to ensure safe and sound banking practices and compliance with banking laws:
- bank holding companies, including diversified financial holding companies formed under the Gramm-Leach-Bliley Act of 1999 and foreign banks with U.S. operations
- state-chartered banks that are members of the Federal Reserve System (state member banks)
- foreign branches of member banks
- Edge and agreement corporations, through which U.S. banking organizations may conduct international banking activities
- U.S. state-licensed branches, agencies, and representative offices of foreign banks
- nonbanking activities of foreign banks
Although the terms bank supervision and bank regulation are often used interchangeably, they actually refer to distinct, but complementary, activities. Bank supervision involves the monitoring, inspecting, and examining of banking organizations to assess their condition and their compliance with relevant laws and regulations. When a banking organization within the Federal Reserve’s supervisory jurisdiction is found to be noncompliant or to have other problems, the Federal Reserve may use its supervisory authority to take formal or informal action to have the organization correct the problems.
It’s a regulatory body, meaning it has at least a partially government component. It has the force of law behind it’s regulations, not like a private body that can only enforce regulations within that body. Folks are free to operate outside of a private entity, but not the Federal Reserve.
Yet, this regulatory body loaned $16 trillion to banks and corporation without having to ask permission of the American people. There are a lot of people who look at the Fed’s opponents as kooks, but maybe it’s time to reevaluate that.