On Thursday, July 10, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke testified before the U.S. House of Representatives’ Committee on Financial Services. The backdrop for the committee meeting, of course, is the ongoing turmoil in U.S. and global financial markets, highlighted by the Federal Reserve’s unprecedented intervention to prevent the failure of giant investment bank Bear Stearns, and more recent worries that the two government-sponsored mortgage lending companies Fannie Mae and Freddie Mac are in danger of implosion.
The time has come, Paulson and Bernanke informed the House committee, to “consolidate” the regulation of investment banks and other comparatively unregulated financial entities, to bring them under a stringent web of federal regulations and bailout guarantees similar to those long endured by commercial banks. “Congress may wish to consider whether new tools are needed for ensuring an orderly liquidation of a systemically important securities firm that is on the verge of bankruptcy, together with a more formal process for deciding when to use those tools,” Bernanke proposed. “Tools,” of course, is federalese for “powers,” and Secretary Paulson, reaffirming his commitment to the U.S. Treasury’s “Blueprint for a Modernized Financial Structure” released last March, was not shy as to what some of these “tools” might entail:
In actuality, most “Americans” have little regard for the Federal Reserve one way or the other. Wealthy shareholders of foundering financial corporations, on the other hand, have welcomed the Fed’s newfound largesse, with the likes of Bear Stearns and other investment banks happy to avail themselves of Federal Reserve loans since the Fed first made such funds available earlier this year.
The Federal Reserve and the Treasury Department are taking advantage of the acute financial crisis to expand federal control over the entire financial service industry. Leaders in the financial industry, for their part, are happy to endure new levels of federal regulatory scrutiny in exchange for taxpayer-funded guarantees against insolvency.
The Mother of All Messes
Ron Paul: "Some Big Events Are About To Occur"
Unintended Financial Consequences
Investors Screwed by Fed
Speculators, Regulators, Militarists, and Money Masters
The Economics of a Free Society
COPYRIGHT NOTICE: IndyTruth does not make legal copyright claims to its original content, on the principle that readers should be able to freely spread information for educational purposes. If you repost anything, please respect our hard work by crediting the author and linking to the original source.