Fed Audit Reveals $16 Trillion in Secret Loans

July 23, 2011 at 1:04 pm

On Thursday Senator Bernie Sanders (I-VT) posted the results of a Government Accountability Office audit of the Federal Reserve on his Congressional website.  The audit was conducted by order of an amendment that Sen. Sanders had added to the Dodd-Frank Wall Street Reform and Consumer Protection Act which was passed a year ago this week.  The results of the audit should be of little surprise to opponents of the Federal Reserve as they only confirm long-held suspicions of the Fed’s surreptitious dealings.

The 266 page report released by the Government Accountability Office identified a number of serious concerns regarding the Fed.  It outlines $16 trillion in secret loans made by the Federal Reserve to domestic and foreign corporations, as well as foreign banks.  To put this into prospective, the current national debt of the United States is around $14.5 trillion.  Sen. Sanders described this by saying: “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else”, an interesting statement, coming from Sen. Sanders, who is a self-proclaimed Socialist.

The audit shows quite clearly that there is a serious problem with the way our economy is run in this country.  We must be in a fantasy world if it is permissible for a government entity that is obviously void of any real oversight to conduct such underhanded, risky and illegal activities.  Alas, this is what we get when our money is created, regulated, and misused by a private banking cartel.  The Federal Reserve is unconstitutional, and this latest news boldly underscores the need to abolish it as soon as possible.

The Constitution in Article 1, Section 8 clearly establishes who is responsible for the regulation of money, commerce and currency:

US Constitution, Article 1, Section 8.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow Money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

The Federal Reserve does not fall under the delineation of “The Congress”.  In fact, the Federal Reserve is not a part of the Government!  It is considered a government entity, in that the Fed Board of Governors is selected by the President and confirmed by Congress, however beyond that, it is nothing more than a private bank with the power to recklessly create any money it requires from thin air.

The audit also uncovered a number of serious concerns regarding conflicts of interest that were found to run rampant among board members of the Federal Reserve and its branches.  The audit uncovered evidence that conflict of interest waivers were distributed to employees and private contractors so that they could retain their investment interests in the very same corporations that they were providing “emergency” loans to.

One of many examples is a $390 billion loan made to JP Morgan Chase by the Federal Reserve Bank of New York at near-zero percent interest rates.  The CEO of JP Morgan Chase was at the time of the loan seated on the board of that Federal Reserve branch.  Incidentally, JP Morgan Chase happens to have also been one of the banks utilized by the Federal Reserve to clear its emergency loans.

The audit also pointed out, that not only is the Federal Reserve inconceivably irresponsible, but they are also masters of irony.  The Fed granted a conflict of interest waiver to William Dudley (now President of the New York Fed branch) that allowed him to retain his AIG and General Electric investments at the same time both of those institutions were receiving bailout money from the Federal Reserve.  The reason, as claimed by the Fed?  They were concerned that if Mr. Dubley had sold off his investments it may have “created the appearance of a conflict of interest”.  Given this logic, that appearances are more important than reality the possibilities become endless.  Given this logic, the Federal Reserve can do virtually anything it sees fit to do, provided that it maintains an illusion of being a responsible, stable, and necessary part of the United States economy.  Considering the absurdly miniscule extent of oversight that exists to maintain Congressional control over the activities of the Federal Reserve the full scope of this facade is untold in its potential magnitude and complexity.

The Government Accountability Office is going to be providing a more in-depth report of their findings in October however the scope of this audit is akin to analyzing a tree, while ignoring the vast forest in existence around it.  A full and complete audit of every facet of the Federal Reserve is the only way Congress or anyone else will be able to get a handle on the problem.

The Federal Reserve is not the savior of our economy.  They are not the architects of our prosperity, or the guardians of our financial future.  The Federal Reserve is a parasite that is sucking the life out of our economy and the value out of our dollar.  The enemy is in our own backyard, hiding in plain sight on every piece of modern American paper currency and inside the vault of every bank and clearing house — a cunning and subversive adversary who wreaks havoc not with armaments, but with calculators, printing presses, and misguided economic theory.  With the prospect of endless money and power it suicides our leaders and seeps liberty from our people.

The destruction of the Federal Reserve and the restoration of Constitutional powers regarding money to the Congress are essential steps toward instituting sound currency and reestablishing prosperity and liberty to the citizens of the United States.

For the full report from the Government Accountability Office: click here.

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