Let's End the Secrecy of the Federal Reserve

Via Firedoglake:

Alan Grayson and Ron Paul have offered an amendment calling for a full audit of the Fed, and they have the support of nearly three-quarters of Congress. But in a last minute power play by the big banks, Rep. Mel Watt will dutifully offer an amendment to not only gut the audit, but make the Fed even more secretive.

Richard Trumka, President of the AFL-CIO, Andy Stern, President of the Service Employees International Union (SEIU), and Leo Gerard, President of the Steelworkers Union, all signed a letter with economists, labor leaders, and bloggers blasting Rep. Mel Watt’s amendment to gut the audit of the Federal Reserve.

Trumka, Stern, and Gerard teamed up economists Bill Black and Jamie Galbraith and blogger Tyler Durden, among others, against Watt’s amendment and accused the Fed of “massive secret bailouts” and “cronyism and favoritism.” Their letter says:

The Federal Reserve balance sheet expanded to more than $2 trillion, along with implied and explicit backstops to Wall Street firms that could cost even more. Who received the money? Against what collateral? On what terms and conditions? The only way to find out is through a complete audit of the Federal Reserve. That’s why we support the Paul-Grayson amendment requiring a complete audit.

The Watt amendment does not repeal the existing provisions that prohibit a GAO audit of the Federal Reserve. In fact, it adds entirely new additional categories of restrictions. Instead of opening up the Fed’s secretive activities to public inspection, the Watt amendment cloaks it in further secrecy.

A vote for the Watt amendment is a vote for more secret bailouts. We urge you to support Paul-Grayson instead.

For labor leaders who don’t often see eye-to-eye this letter should tell you how important this is. This is a strong indictment of the Fed, the big banks, and their 'boys' in Congress.

You can add your name to their letter to call for a full audit of the Fed. Click here to add your name to our petition to reject more secret bailouts and Fed cronyism.

Empty Quiver?

The Fed is running out of room to goose the economy. This rate cut comes on top of a report this morning that the Consumer Price Index fell a record 1.7% last month which means that inflation is no longer the worry it was. It does mean that we are getting some deflationary pressure in the economy and that is a bad thing since it can begin to spiral and ripple across the entire economy in a very bad way. BTW, don't expect the banks to lower the interest on your credit cards because of this.

NEW YORK (CNNMoney.com) -- In its latest effort to try and stimulate the U.S. economy, the Federal Reserve cut its key interest rate to a range of between zero percent and 0.25%, and said it expects to keep rates near that unprecedented low level for some time to come.

The central bank typically sets a specific target for its federal funds rate instead of a range. The rate had previously been at 1% and this marks the first time the Fed has cut rates below 1%. Most investors were expecting the Fed to cut rates to either 0.25% or 0.5%.

Wall Street seems to like the news since as of this writing the DOW is up 375 and change and 9,000 is almost within range. Makes me happy.

Update: Krugman adds "Seriously, we are in very deep trouble. Getting out of this will require a lot of creativity, and maybe some luck too."

No kidding?

Day Late, Dollar Short

NEW YORK (CNNMoney.com) -- The Federal Reserve unanimously approved new mortgage lending rules Monday in a crackdown on shady practices - particularly those involving subprime loans made to borrowers with weak credit.

The agency made several substantial revisions to the proposed regulations it unveiled in December. Many of the changes acknowledged consumer advocates' concerns that the rules still contained too many loopholes that would allow shady lending practices to continue.

While not admitting that Alan Greenspan and his bunch, with the wholehearted complicity of Shrub and company, totally ignored their fiscal responsibility over the last 10 years or so CNN is reporting that (and this is really amazing) the Fed is tightening the rules on mortgage lenders. Talk about shutting the barn door!
Look at these revolutionary ideas being spouted by the Fed:

The new rules governing "higher-priced," or subprime, loans;

• Prohibit creditors from extending credit without regard to a consumer's ability to repay the loan from income and assets other than the home's value. The lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan.
• Require creditors to verify income and assets they rely upon to determine repayment ability
• Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years.
• Require creditors to establish escrow account for property taxes and homeowner's insurance. This rule will be phased in during 2010.

How revolutionary! Wait there's more:

Additional rules will apply to all mortgages, regardless of rate.

• Creditors and mortgage brokers cannot coerce a real estate appraiser to misstate a home's value.
• Companies that service mortgage loans are prohibited from engaging in certain practices, such as pyramiding late fees. Also, they must credit consumers' loan payments as of the date of receipt and provide a payoff statement within a reasonable time of request.
• Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan, including home improvement loans or refinancings. Currently, these estimates are only required for home-purchase loans. Consumers cannot be charged any fee until after they receive the early disclosures, except a reasonable fee for obtaining the consumer's credit history.
• In advertisements, companies must include additional information about rates, monthly payments and loan features. The rule also bans seven deceptive practices, such as saying a rate is fixed when it can change.

Don't you feel better now that you know your government is on top of the situation before it turns into a crisis? Assholes!
Oh! and this whole financial crisis is in your mind. Get real!