GAO Audit Exposes Fed's Corruption Once Again

Tyler Durden's picture

Today, in addition to the official launch of Europe's PPT, we get a reminder that our own version, the Federal Reserve, is as criminal and corrupt as always, especially when working in conjunction with that old standby, Goldman Sachs. Just like back in 2009 and 2010 it was discovered that former Goldman director and New York Fed Chairman Stephen Friedman had bought tens of thousands of shares of Goldman stock while the entire system was being bailed out by the very same Fed, so today we learn that another former Goldmanite and then Plunge Protection Head team (i.e., Brian Sack predecessor) Bill Dudley had held shares of AIG stock while the Fed was arranging the bailout of the doomed insurer. But it's all good: Dudley had a waiver. Mostly likely signed by his then boss and former Goldman coworker Friedman. We wonder if it was Dudley who signed Friedman's waiver? From Bloomberg: "The Federal Reserve Bank of New York’s William C. Dudley got a waiver in 2008 to keep personal financial holdings of American International Group Inc. (AIG) after the company received a Fed rescue, a U.S. senator said. Dudley, who was the New York Fed’s markets-group chief at the time and is now the bank’s president, is the senior New York Fed official identified in a Government Accountability Office report today as receiving the waiver, Senator Bernard Sanders, a Vermont Independent, said today in a statement. Jack Gutt, a New York Fed spokesman, declined to comment." Of course, when one is from Goldman, one does not care about the glaring impropriety of one's actions. After all, one rules the world. And speaking of Bernie Sanders, he earlier tore the Fed a new one, after he released details of the Fed's GAO audit and took every opportunity to make his opinion on the master criminals well-known: "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," he said. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else." Well, didn't everyone know that by now?

More from the Hill:

The Government Accountability Office (GAO) released its top-to-bottom audit of the Fed Thursday, opening the central bank to fresh criticism from the lawmaker that had pushed for the audit in the first place.

The GAO was directed to conduct the audit by a provision in the Dodd-Frank financial reform law pushed by Independent Sen. Bernie Sanders (Vt.).

The GAO found that the Fed awarded $659.4 million of contracts to private parties during the crisis to help facilitate those emergency moves.

Eight of the 10 largest contracts were awarded on a noncompetitive basis. While such a "no-bid" contract is consistent with the Fed's policies, the GAO said those policies could be improved to pursue competition whenever possible and limit the length of any noncompetitive agreements.

The GAO also found that while the Fed had policies in place to avoid conflicts of interests for its employees, those could also be improved.

In particular, the new roles taken on by the Federal Reserve Bank of New York and its employees during the crisis increased the chance for potential conflicts that were not addressed in existing policies.

Sanders grilled the Fed on bailing out not so much American companies, as Dexia and a few other insolvent European monsters:

Sanders was highly critical of the Fed making emergency loans to foreign banks and corporations, which he said was an abuse of the Fed's power.

"No agency of the United States government should be allowed to bail out a foreign bank or corporation without the direct approval of Congress and the president," he said.

Sanders went on to criticize the Fed for its policies regarding conflicts of interest, saying that waivers provided to employees allowed them to keep investments in financial institutions and companies that received Fed loans.

As a prominent example, he pointed out that the chief executive officer of JPMorgan Chase was on the New York Fed's board of directors at the same time the firm was receiving more than $390 billion in Fed assistance. The firm also helped clear loans for the Fed during its emergency lending.

"No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," said Sanders.

At the end of the day we get yet more huffing, more puffing, while the status quo takes its taxpayer funded check to the bank even as 90% of the population turns to cannibalism. But at least the starving serfs have iPads and prime time Dancing with the Stars, complete with commercial breaks for GE products - at least they will eat each other in a happy dazy of temporarily induced frontal lobotomy.

Just like the status quo likes it.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Clueless Economist's picture

I just got my BS in Economics from ITT Tech.  I am a very attrative female looking get a job at CNBC.  In order to get an on air job, which of the men should I look to sleep with?  Steve Liesman, Joe Kernan, Rick Santelli, Jim Cramer or Larry Kudlow?  Thanks for any help!!

illyia's picture

Maria - she's got the Money, Honey...

centerline's picture

Post some pics so that we can pass them along.  :-)

Commander Cody's picture

A gang bang with a happy ending should suffice.

alien-IQ's picture

Ask Erin Burnett. She'll know.

Cursive's picture

@Clueless Economist

Link to pics or GTFO.

hedgeless_horseman's picture

...which of the men should I look to sleep with? Steve Liesman, Joe Kernan, Rick Santelli, Jim Cramer or Larry Kudlow?

I am not so sure that Steve Liesman is a man in the traditional sense. 

Dr. Richard Head's picture

A womane banging Liesman - that's a lesbian encounter.  Liesman is the bulldyke of the couple. 

Henry Hub's picture

Hey Clueless_Economist. I can think of a few positions I would like to try you in!

Libertarian777's picture

Turbo Timmy, I believe he's tired of paying $170k.

BlackholeDivestment's picture

 Clueless, the bar is pretty high, are you sure you could hold your lunch and not just pass out, or something, from the pure talent that's currently deployed? really can't teach or learn this kind of talent, you are born with it or you're not.


centerline's picture

The Fed is a private corporation owned by the banks.  Enough said.  Bad idea of the century (unless your a banker).

alien-IQ's picture

same shit different day.

the song remains the same.

PlausibleDenial's picture

I am more like "Dazed and Confused".  Good show on them on Bio last night.

Cognitive Dissonance's picture

"This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else." Well, didn't everyone know that by now?

To know something is one thing. I know I will die some day. But to know you will die tomorrow is an entirely different matter.

We may 'know' about these various financial crimes and corruption. But we don't "KNOW" them to such an extent that we are compelled to action.

Cognitive Dissonance's picture


It is our proximity to danger, and not the danger itself, that creates the urgency to act or not to act.

centerline's picture

It is still in the abstract.  People don't see the direct connections to thier lives (yet).  If they did, it would be hell to pay.

scatterbrains's picture

when ever I read stuff like this my thoughts turn to heros like Joe Stack.

Rodent Freikorps's picture

The whistle blower for Fast and Furious has been fired.

Our govt. has gone over the edge.

YesWeKahn's picture

"As a prominent example, he pointed out that the chief executive officer of JPMorgan Chase was on the New York Fed's board of directors at the same time the firm was receiving more than $390 billion in Fed assistance. The firm also helped clear loans for the Fed during its emergency lending."



StychoKiller's picture

Why isn't Mr. Sanders grilling Eric (Place)Holder for his lack of doing (well, pretty much anything!) about these alleged crimes?  The Stupid, it burns!!

entendance's picture

a senior Eurosystem source told Market News International that the ECB would continue to accept Greek paper in the event of a default, but only if it were covered by guarantees put up by the Eurozone governments.

Hondo's picture

Corrupt as usual.....another reason to realize unless you are part of the club (elite) you, and your hard earned savings, are nothing but fish food.

Marley's picture

Some people are more equal than others.

Raynja's picture

Altho the lobotomy will not be transitory, your memory of the procedure will be

jmc8888's picture

It's something we should as a society know by now, that socialism for the rich = fascism, and that's what we have as an extreme form of now.  (as opposed to the lesser but still same form for the past whatever decades)

But hey, when they're not watching Jersey Shore, or some other 'non-reality, reality series', they watch a half hour a week of Not Necessarily The News, parading as News.


hedgeless_horseman's picture
by hedgeless_horseman
on Thu, 07/21/2011 - 12:34


07-21 10:13: US Senator Sanders says GAO found that NY Fed's Dudley received waiver to let him keep investments in AIG and GE as firms were rescued


"When you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed."


                                                     -Ayn Rand

                                                       Atlas Shrugged

centerline's picture

I read that somewhere else recently (can't remember where though... those brain cells must have committed suicide).  This particular line just makes me want to cry.  It couldn't any better summarize the world I have personally known for the bulk of my adult life and professional career.  The sad part is that this behavior is not just reserved for the elite.  It has penetrated every level of society.

Random_Robert's picture

"The sad part is that this behavior is not just reserved for the elite.  It has penetrated every level of society."

Well of course it has. Human endeavor, like electricity or flowing water, seeks the path of least resistance...

People emulate the behaviors of others. So, when they see "successful" people behaving badly, they assume that the behavior is what made them successful...

And thus, another "Snooki" enters the world. Talentless, meaningless, but somehow worthy of emulating....


TruthInSunshine's picture


Does anyone know if Atlas shrugged yet?

I'm thinking he may have, and it was just missed in the fast paced world of information, disinformation, misiniformation and malinformantion that is blasted at us in the New Normal Times.

Cognitive Dissonance's picture

Doomed yes.

But there is no time frame here and one man's 'doomed' is another man's successfully kicked can. 'They' will burn Rome until the cockroaches overrun their safe house, the safe house they just abandoned.

packman's picture

hh: infinitely apropos!  The perfect place to break out that quote.  Never was it more applicable.


slewie the pi-rat's picture

now, now, these guys are masters of our universe, so with a note from home, school isn't that important. or is it? 

somebody ask barney whether this is covered, or not, now, ok?

if it isn't, just put it on his fixit list.  thnx. 

TruthInSunshine's picture

slewie, you know as well as anyone that Obama is just a waterboy for the global banksters.

Not only would he not need to approve any waiver, they'd tell him to STFU if he dared to offer his opinion on the matter.

White.Star.Line's picture

If the FED truly faced an audit, they would provide an abacus, a case of rum, and a team of 3 year toddlers to assist with the task.

illyia's picture

TD - I am lifting this post in entirety and putting it over on the Kossacks - as they are entirely clueless. Chipping away at ignorance, daily.


TruthInSunshine's picture

You're doing good work.

Only III % of sheeple can be awakened.

But that III % ultimately becomes a critical subset of the population in the battle between good and evil.

Try to get to them before they're tagged and bagged, full on style, by the establishment (hopefully sooner than 18 or so):

illyia's picture

In semi-entirety. Boy are they touchy over there... the copyright thing. What are ZH policies on lifting whole docs?

Anyway: 5 paragraphs per source only, and properly attributed.


packman's picture

Just imagine what would come out if we had gotten the full and deep audit that Ron Paul wanted, rather than the watered-down Sanders audit that we got.


Rodent Freikorps's picture

Seems to have all the pedigrees:

Among other public service activities, Friedman is the Chairman Emeritus of the Board of Columbia University, Chairman Emeritus of the Executive Committee of the Brookings Institution, and a member of the Council on Foreign Relations. He is also a benefactor of his alma mater Cornell University, particularly its wrestling program as the college's wrestling building is known as the Friedman Center.

Bansters-in-my- feces's picture

chief executive officer of JPMorgan Chase was on the New York Fed's board of directors at the same time the firm was receiving more than $390 billion in Fed assistance. The firm also helped clear loans for the Fed during its emergency lending.

Did that say...$390...BILLION......

Pretty soon your talking popcorn money.

Fucking Rothschilds whores....

onlooker's picture

One of the problems of ongoing crime and corruption is the adjustment to it as some sort of "normality'. When the overseers are the contributors to the corruption, it is worse. Then if the media is the puppet of the corrupt, it is a tidy wrap up of rich bitchez win, win, win.


It is not a question of too big to fail, but a question of too big to take down.  

hedgeless_horseman's picture

...too big to take down.

That is what King George III thought.