"Have The Federal Reserve Or Prime Brokers Ever Tried To Manipulate The Stock Market?"

Tyler Durden's picture

Alan Grayson: I would like to know whether it is within the Federal Reserve's legal authority to try to manipulate the stock market or the futures market.

Federal Reserve GC Scott Alvarez: I don't believe the Federal Reserve tries to manipulate the stock market...(Yoda: Do or do not, there is no try.)

Alan Grayson: Does the Federal Reserve actually possess all the gold that's listed on their balance sheet.

Scott Alvarez, doing a classic poker body language tell, and taking his time: Yes...

Alan Grayson: Who actually executes the trades for the Federal Reserve in the markets?

Scott Alvarez: The Federal Reserve Bank of New York, which executes trades through Primary Dealers.

Alan Grayson: Can you name one Primary Dealer?

Scott Alvarez: JP Morgan Chase

Alan Grayson: Do you mind if we have a GAO audit to see if there has been front-running or insider trading by them? Do you mind? Is that ok with you?

Scott Alvarez: I am not sure if I have that authority...

 

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ghostfaceinvestah's picture

I have these proceedings playing in the background at work.  EVERY American should be listening to this.  The committee seems to be learning.  The issue of this problem going back to the bailout of LTCM has even come out (of course it is before that, but at least they are not blaming it on the failure of Lehman).  They are talking about Hayek, Mises, etc.

Gilgamesh's picture

Huh, is there some kind of hearings going on today?  All I can see in the news is Iran and G20.  I'm sure if there were important hearings going on, it would be all over the corporate media...  Surely just a coincidence, the timing of news today - and the market selling off.

koaj's picture

i wonder if cnbc is live streaming this thing also or are they running a special Kneale/Kudlow Power Lunch?

ghostfaceinvestah's picture

You wouldn't know there was a hearing based on the 12 people in the room, but there is some good stuff being said.

I think the direct correlation is between the selloff and the slowdown in MBS money printing.

http://www.newyorkfed.org/markets/mbs/

$25B last week, again.  With 6 months to go now, instead of 3 months, buying should slow down to $12B a week.  Is that enough in and of itself to starve the equity markets of much-needed liquidity?  Sad comment on the state of the market if that is the case.  And scary to think what will happen with UST buying stops, and then MBS buying stops in March.

S&P 500 @ 500 ahead?

Anonymous's picture

"You wouldn't know there was a hearing based on the 12 people in the room."

And that speaks volumes about Congress' desire to understand the problem and change things, doesn't it? Most of them are worthless when it comes to representing anything other than those who pad their pockets for the next campaign or who will offer them a job after they leave office.

Anonymous's picture

So sad ...
The entire markets directory, www.newyorkfed.org/markets, has totally vanished a day later, Saturday. One hopes future auditors will not be vexed or misled by large numbers of 'vanished' ledger entries.

AndItsGone's picture

 Austrian economics going toe-to-toe with the kleptocracy in an open session of Congress. The proton torpedoes are coursing through the veins of the Death Star.

h4rdware's picture

There was another good clip later on - the testimony of Tom Woods of the Mises institute. It didn't make its way onto youtube unfortunately but it was definitely worth watching if anyone can unearth it. The testimony itself can be found on mises.org but the section extended beyond it.

Fish Gone Bad's picture

If anyone wants to send Grayson their ideas or questions, here is his page where you can send input: http://action.firedoglake.com/page/s/1207hearing

 

As usual, let as many people know as possible.  If you have teenagers, have them post a myspace bulletin and ask others to repost it.  After some time goes by, have them delete the posting, and then re-post it.  Doing this trick about 10 times over a day can really get a message out.

skeptic_ill's picture

Alan Grayson: Mr. Alvarez, would you like to take a moment to change your undergarments?

Scott Alvarez: No thank you Mr. Grayson, I'm wearing Oops I Pooped My Pants

Argos's picture

Not a very strong performance for the head lawyer.  He reminds me of Barney Fife.

MsCreant's picture

Remember, the Head Lawyer is the one with the knee pads.

Anonymous's picture

No. That's my ex-wife.

Altan311's picture

Absolutely mind blowing stuff, Grayson seriously dropping some hammer blows, and will someone please get Alvarez a body language coach? I keep thinking of that scene from ants when the foot comes down...

Anonymous's picture

Seems like the sheepeople are finding sufficient entertainment in another episode of The Dog and Pony Show.

MsCreant's picture

Possibly a fair observation. What are we not attending to then? Direct us simpletons.

Cow's picture

He's got the same body language coach as Timmay Geithner

Anonymous's picture

I have visions of Tim Roth on Lie to Me just chewing him apart......how many "tells" did that asshole have.....?!!!

Art Vandelay's picture

Every time I watch these hearings, I keep hoping that a few of these other putzes would simply shut their traps and cede their time to Grayson.  Imagine what he could do with 20 or 30 minutes, instead of just 5.

Anonymous's picture

I totally agree. He is one of the very few relevant interviewers in congress.

Cow's picture

Agreed.  What is more important than that line of questioning?  Let him finish.

Missing_Link's picture

Yep.  Why can't the Republicans ask these kinds of questions?  Makes me ashamed of my party.

andrew123's picture

Frankly, I thought Grayson sounded like a simpleton.  Instead of asking broad questions like "has the Fed ever manipulated the stock market" and then saying "I think you know what I mean", he should have asked very specific questions:  Has the fed ever directly or indirectly bought us equities or us equity index futures?  Has the fed ever loaned money against equities or equity futures?  Has the fed ever made guarantees to any other party regarding its purchaaes of equities or equity futures, etc."  Any pronoucnement of interst rate or manitary policies could have an indirect effect on equities, so I think Grayson's question was far too broad.  I appreciate the work he is doing, but I though he came across too simplistic.  On another matter, who was the unprepared idiot that asked Alverez all the basic points about the Fed (white guy, black hair)?  He was sitting behind a a plack that said Wilson, but the only Wilson that is on the committe, doesn't look like the guy on the web, and his office said he was not in attendence.

earnyermoney's picture

I believe the camera angle is providing an optical illusion. It is really apparent for members sitting on the outter edges of the dias. Most likely, Wilson sits adjacent to the person of interest.

ghostfaceinvestah's picture

I had the same initial reaction, but you have to remember that part of this is theatre.  Grayson knows this clip will be posted on YouTube and replayed. It has to be kept simple for the people to understand.

I don't trust Grayson as much as say Ron Paul, but whatever it takes, breaking down the Fed is going to take a lot of doing.  The last guy who did it (Andrew Jackson) had to fire several of his cabinet to get it done.

Altan311's picture

Don't forget the assasination attempts by supposed Rothschild agents. Jackson was a horrible racist man who drank too much and abused minority groups for sure, but when they aked him on his deathbed what he was most proud of he said simply "I killed the bank"

fuck yeah

Anonymous's picture

..and then what?

The Biddles and their henchmen simply tanked the economy in the 1837 Panic turning van Buren admenstruation into a debacle.

Not saying Jackson shouldn't have done what he did but their was a very heavy price to pay. For decades.

Anonymous's picture

...which is why we must make sure that it does not happen the same way again this time...

we loved sir grayson's schtick today but we agree that in the future, the questions should be more specific & pointed. broad strokes may reach a broader audience, but tighter inquiries make it that much more difficult to slip away.

for we bet a silver dollar that whoever the FED brings in next time will be much more slick than mr. alvarez, esq. was today.

Anonymous's picture

U fell for it. AJ probably didn't drink TOO much and prob wasn't that much a racist.

Just like JFK who tried to dismantle the FED. The propagand
machine made him out to be a drinking, womanizer.

He could barely walk due to chronic back pain,

RIP JFK... Liberty fell with him. Now look at the mess.

pigpen's picture

Dylan and Ron Paul skewer the FED on MSNBC yesterday.

"We should never be fearful of the truth"

http://www.youtube.com/watch?v=GZ5e5MfEY2o

I need more cowbell's picture

Perhaps a simpleton to you, but in the land of village idiots and corrupt bought-offs, Congress, he sounds like Atilla the hun to me.

Anonymous's picture

your point is well taken....he leaves open
the barn door so that the flies and cows can
escape...

grayson is merely grandstanding....he gives
the impression of asking tough questions when
all he is doing is winking....

grayson: mr hitler, has the nazi party ever
burned jews to get their gold teeth?

hitler: we have never burned a jew for their
gold fillings..

RagnarDanneskjold's picture

Glad to see others saw that. A competent lawyer will never step into an open ended question. I didn't even know what Grayson meant, at first it sounded like he meant direct intervention and then he seemed to back off. When the lawyer started talking about interest rates, Grayson didn't differentiate. Well played by the lawyer. It made Grayson appear ignorant, which is the Fed's goal.

If it's political red meat for the simpletons, Grayson should realize that there are non-simpletons out there. 

Anonymous's picture

personally we think alan was just a little too overexited and a bit too underprepared, but we're not holding our breath either. however, there is a way to discover for sure...

perhaps ZH should do a poll:
Top 10 Questions to ask the FED

send the results to sir grayson, see if he bites. at the least, we'll know which way he really leans as soon as he opens his mouth next time.

Anonymous's picture

on balance, I think he hurt his own cause, acting all cutesy and basically coming across as the ignorant party

ghostfaceinvestah's picture

http://www.newyorkfed.org/markets/mbs/

$25BBBBB again this week.

Next week (starting yesterday) is when purchases are supposed to slow.  Do you think we will actually see a slowdown?

Note the disbursement between purchases of Fannie/Freddie paper versus Ginnies.  Ginnies have nearly the market share of Fannie/Freddie, but have full faith and credit backing.

What will happen to the market for Fannie/Freddie's if the Fed stops buying.

How much is this bailout of Fannie/Freddie really costing us, and why has there been no move to reform them?

Why are they not just rolled into the FHA?

mbielik24's picture

If I'm notmistaken, they would have to raise the debt ceiling (a few trillion) to take FNMA, FHLMC on their books.

Anonymous's picture

the fed is not subject to debt ceilings.

SDRII's picture

ghost trying to piece together the implicationt hat mbs buying frees up cash for PDs to buy the longer dated treasury auctions rince wash repeat. that said any thoughts on the repo implciations of flooding the market with collateral to the MM? Liked the comment the PDs don;t have the balance sheet for such a move?

Anonymous's picture

I've got to send a thank you note to Mr Grayson.

JohnKing's picture

Maximize employment, stabilize prices..make our buddies rich. Psycho-bankers!

Bolweevil's picture

"Save the unfortunate rhetorical flourishes for us (congress), that's what we get paid for."

Barney Frank

Rusty_Shackleford's picture

I know.

 

What a f-ing douchebag.

 

Anonymous's picture

We have a second, and the motion brought to the table is : Barney is a douchebag...

MsCreant's picture

Massengill disposable douche. Re-elections you know.

Hephasteus's picture

I'm going to go with dual purpose douche bag colostemy bag.

chindit13's picture

While that was a good exchange, I wish Grayson had been more pointed and just asked, "Has the Fed engaged directly or through a proxy in any buying of equities or futures in the last year?"

Another interesting moment was when Watt demonstrated why democracy, as wonderful as it is, is fraught with danger in that it might lead to the inmates running the asylum.

Of course in the end we all know that everyone in the Fed is honorable and beyond reproach, and that we should just mind our own goddamn friggin business and let these honorable people handle trillions of dollars with a small select group of firms without any transaction open to the full light of day.  Taxation without illumination.

 

Anonymous's picture

In the late 19th century,and before the demise of the Ottoman empire,corruption was rampant between the governing elite. Does that mean people were sleeping?of course not. There were many reform movements that were constantly pointing out to that and trying to correct it. Except that all their trials were in vain.So after it was at the edges of Vienna,the Austrian capital in the 1600's,there are currently three countries between Turkey an Austria. I watch with facination all those testimonies about trillions of dollars that nobody knows(or claim that they don't)where it went,and yet it seems that nobody is capable of doing anything about it.