Summarizing Today's Fed Chairman Q&A: Prepare To Vastly Exceed Your Recommended Daily Allowance Of Bernanke's Prevarications

Tyler Durden's picture

Going through today's pertinent Q&A with Bernanke, initially we focus on Fed nemesis #1, Ron Paul. First question of relevance: "Do you Mr. Bernanke think that rates were hold too low for too long?" The degree of Fed delusion is easily seen by the response: "the bottom line is nobody really knows for sure, but the evidence is quite mixed." Obviously the bald one has never attempted to sell a home in the Inland Empire. The evidence sure would be a little less mixed in that case. But at least Bubble Ben has given a speech on it (which incidentally caused John Taylor to almost have a conniption against the stupidity of the Fed's chairman). Yet just in case you thought the man may have at least one screw unloose in his voluminous cranial hollow, Bernanke opens his mouth and says "Even if rates were too low for too long, the magnitude of the error was not big enough to account for the huge crisis we had. I think what caused the crisis was a failure in regulation.".....And this is the man who determines monetary policy....Only now do we find out he has never actually ever opened an Econ 101 textbook, instead opting to go straight to writing them. Luckily Ron Paul proceeds to give the Princeton "expert" a much needed lesson in monetarism, and what happens when rates are zero for far too long.

To be expected, Bernanke certainly did not appreciate being schooled in Econ 101. After Paul rips Bernanke's face off with the Chairman's constant excuse that regulation is the answer to everything, arguing instead that artificially low rates merely send constantly flawed price signals, Bernanke retorts "Well you need some system to set the money supply. I guess you are a gold standard supporter." At this point Paul gives the most priceless response ever: "I am for the constitution." (4:50 into the clip)... A flabbergasted Bernanke again proceeds to cast the blame... This time everywhere but the Fed: "Every major country in the world uses a Central bank to make some decision about the money supply." We ask the philosophy experts among our readers to tell us just what type of fallacy this is. Ron Paul once again has a brilliant response: "Then there is no good information for the investor unfortunately." What are you talking about Ron - there is Cramer. At least until such time as his particular regulators wake up... Which they seem to have done so today finally.

 

Next up, California's Brad Sherman asks the current-former Fed Chief duo the following runner up to the most critical question of the day: "Bureaucracies hate bad headlines, they'll often do desperate things behind the scenes to avoid that big headline from breaking. Prudential regulators are going to get bad headlines if a big institution fails, particularly under some circumstances, and if they can prevent that failure, if they can just put it off for six months, their reputations and careers can be saved. Monetary policy, just cutting the interest rate by quarter point can save a troubled institution. So how can we be sure that monetary policy is not influenced by the natural human desire of bank supervisors, to save one or two institutions, for at least long enough for them to move over to another department. How do we make sure that monetary policy does not meet the career needs of bank supervisors?" And the token bullshit response from the follicularly confused one: "I don't think that's a very realistic scenario." Oh really? We think it is, and in fact we think that the probability of influence on monetary policy arising from this line of thinking is much, much greater than all that other BS we have been hearing about how an audit will make the Fed become an engine of hyperinflation, the argument that Barney Frank, Chris Dodd, Mel Watt and all the other bought and paid for Wall Street cronies are using to prevent Ron Paul's audit the Fed initiative from ever passing. Bernanke elaborates on what one day will be an amusing case study: "I suspect the Central Bank Chairman will be around and concerned about his or her reputation when the economy has excessive inflation or whatever problem might arise from bad interest rate policy. I don't think there is much evidence for that particular issue." How about the issue that every reputation can be bought and paid for by someone with a big suitcase full of brand new $100 trillion bills, with a portrait of Supreme Chancellor Blankfein on the front? This is post the hyperinflation - certainly the Central Bank chairman will not be dumb enough to want to be paid in Pre-Petition money.

 

Yet of all questioners, Rep. Scott Garrett asks the truly most relevant questions of the day. First among them: "Are the GSE obligations sovereign debt?" Bernanke's response: "We stand behind it, but whether it is legally sovereign debt or not, I am not equipped to tell you." Same thing from Volcker, who adds that it is a "bad arrangement where you have this quasi private organization and the government stands behind it." So not even the wannabe uber regulator knows how to account for an amount equal to half of the total US Federal Debt. Swell.

On Lehman Garrett asks "The Fed was there on scene, your folks were there at Lehman's. Was the Fed aware of the Repo 105 and the accounting irregularities going on?" Bernanke answers "No - they were hidden. We are currently, for example, the principal regulator of Goldman Sachs, and we have about a dozen people on site, and another dozen who are looking at the company. We had in this case two people assigned to Lehman. And their main obligation was to make sure we get paid back our loans.... Our objective on the discount window loan was to make sure it was safe and they were safe."

Now parse the last few sentences carefully. Not only does the Fed admit that it is and was in the Fed's interest to delegate manpower to make sure that Goldman is fine (in an agent ratio of 6-to-1 "scouring" over Goldman's books), but Bernanke blatantly contradicts himself when claiming the reason for the presence of the Fed's entourage. If the Fed was indeed so focused on recouping its discount window borrowings, then how on earth did Geithner green light that Lehman would be allowed to deposit a nearly $3 billion  CDO, which contained loans by CFC, which after a cursory look Citigroup determined was "Bottom of the barrel" and "junk"? What is the basis of this dual standard - why does the Fed pretend to be concerned with safeguarding taxpayer money (with which Bernanke justifies its minimalist presence at Lehman) when it comes from the Discount Window yet is happy to collateralize "junk" paper in the Primary Dealer Credit Facility? Is whoever was in charge of the Lehman account at the FRBNY some schizophrenic (and please let it not be discovered that the person in charge was, just like in AIG's case, again Steven Manzari)? And why does the Fed believe it has any credibility as an uber-regulator when it constantly fails a less than uber-one?

In earlier questioning by Spencer Bacchus, Bernanke answered that the only reason why the Fed had a "couple" of people in the company, was to make sure that Lehman "repaid the money lent by the Fed's Primary Dealer Credit Facility." Yet the Fed had lent out money, as noted above, collateralized by, well, excrement. Once again that is a truly "brilliant" overture by a wannabe regulator of all that has a dollar sign in front of it. 

Bernanke digs himself even deeper. When explaining why the FRBNY got paid back, BB says "we took collateral and we took extra large haircuts to make sure it was safe." Oh... so now you care about getting paid back. Was it, perhaps, under the guidance of one Goldman Sachs, who may have at this point decided it was time to rid the world of the pesky Lehman Brothers that made you start enforcing legitimate collateral controls?

Then Garrett asks the key question: "In light of these reports is this something that we should be concerned about? Is activity at these other [banks such as Goldman] is that something that (a) we should be concerned about and (b) something the Fed should be concerned about and are you looking into it." Bernanke's retort "[the banks] are now under our consolidated supervision, so we are now paying attention to these issues." That's the non-answer. As to the answer of whether the Fed is looking at whether shady accounting is going on or was going on in the past, Bernanke's version of the Fifth is as follows: "I don't know. This report just came out this week." In other words if Peck had not agreed to declassify Valukas' report, if there was no pressure to put the Examiner's report in the public domain the Fed would never have expressed any interest into just what kind of shady accounting goes on to mask the Tier 1 and Risk Based Capital of the banks under its supervision, and that leverage ratios by most of the banks it supervises are likely complete shams?

A relentless Garrett keep probing: to the NJ representative's question whether the Fed demanded that Lehman's regulator (whoever it may be since it was not the Fed, even though the Fed had implemented three separate liquidity stress tests, of which Lehman failed every single one) require that Lehman raise its liquidity, Bernanke once again gets an acute case of amnesia: "I don't have the exact information that you are asking." So once again the Fed proves that the only thing it can regulate is the bribery sinking fund at Goldman et al with direct recipient Federal Reserve governors. Everything else will just fall into place once yet more of Goldman's competitors are done away with, and Goldman (and JPM, of course, can't forget Fed, Jr), are left standing as the only two financial firms in the known universe. And this is the Fed that lame duck and financially supremely challenged Chris Dodd wants to put in charge of regulating everything in this country? If that really ends up happening, we are so #&$*ed... but not before Goldman funnels all of Americas' money into its Middle-Class Irredeemable Negative Interest Rate All-market Fund SIV.

 

 

 

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GNH's picture

Per Bloomberg, Bernanke: “We are quite concerned by proposals to make the Fed a regulator only of the biggest banks,” Bernanke told the House Financial Services Committee today in response to a question. “It makes us essentially the too-big-to-fail regulator. We don’t want that responsibility.”  But, the Fed wants to regulate all the banks. “We want to have a connection to Main Street as well as to Wall Street,” Bernanke said. “We need to have insights into what is happening in the entire banking system.”  Isn't that an added responsibility to just regulating the TBTFs?

Now, I'll admit I may be missing something, but if it's too much of a responsibility for those bastards to monitor the big banks, we need to allow them to monitor all the banks? WTF?

Missing_Link's picture

Yet of all questioners, Rep. Scott Garrett asks the truly most relevant questions of the day. First among them: "Are the GSE obligations sovereign debt?" Bernanke's response: "We stand behind it, but whether it is legally sovereign debt or not, I am not equipped to tell you." Same thing from Volcker, who adds that it is a "bad arrangement where you have this quasi private organization and the government stands behind it."

 

So not even the wannabe uber regulator knows how to account for an amount equal to half of the total US Federal Debt. Swell.

Pardon me  ...  I am going to throw myself out a Goddamned window now.

What kind of fucking banana republic are we running here?!?!?

Popo's picture

Exactly right. This *right here* is an example of outright governmental deception and regulatory failure. It is sovereign debt, or it is not.

Are we financially on the hook or not? Ben Bernanke's answer is essentially: Who knows if it's actually sovereign debt, ha ha!! It's so tricky I can't tell you now, wink wink!!

This grey area is an obvious admission that the door to the henhouse not only stands ajar, but it is nailed wide open, and no one is supposed to ask any questions. (If you do ask the question, you will of course get the run-around).

If Bernanke is not "equipped" to tell us, who is?

And shouldn't we know the answer to this question two years after the GSE's were bailed out by the tax payer?

[ rant on ]
Let the f*ckers go bankrupt. Bring the fucking system down. It's broken and it's hurting us.
[ rant off ]

Jean Valjean's picture

Yes, Yes, Yes.

No jobs for bloodsuckers.  Get a real job.

And please hurry.  I'm getting impatient.

Fish Gone Bad's picture

"We stand behind it" is an admission that GSE obligations are sovereign debt. 

cougar_w's picture

Yup yup yup. That is how investors will see it, that is how the BK courts will see it, and that is how it will go down.

deadparrot's picture

Should congress start mailing these questions to BB in advance so he doesn't waste our time by constantly pleading ignorant. Of course he knows. He just has to play dumb to keep the charade going a little longer. And Ben, the answer is obviously yes. Otherwise, both entities would see their pathetic stock prices drop to zero instantaneously.

Poor Ben, I know you are not as stupid as you look. Must suck to have to play the fool day in and day out.

jdrose1985's picture

Once having watched the clip of Rep. Garret questioning Bernanke, watch it again but pay attention only to Fed General Counsel Scott Alvarez' facial expressions throughout the session.

At 3 minutes into the clip, Bernanke stumbles a bit when answering Garrett's question about how many people they have at Goldman currently. Counsel Alvarez' face "cracks" and a wry smile escapes the moment Bernanke says he was given the number just that morning, in fact!

What the hell is that all about? Are these Q+A sessions scripted ahead of time and Alvarez was the one who clued Ben in on it?? Or is Alvarez just smiling because he's happy to know that..while Ben is a piss poor liar and we all know it, there's not a fucking thing we can do to stop them?

I don't know about that, but I would give a silver eagle or two to know the story behind that little rat bastard's knowing smile.

AnonymousAnarchist's picture

I'm no philosophy expert but I'm going to say that fallacy is an Appeal to Common Practice.

Cognitive Dissonance's picture

Nice!

Many people say something is self evident because everyone thinks it's so. The majority determines facts. This more accurately describes group think, not intelligence or fact.

Rusty_Shackleford's picture

Complete and utter lawlessness.

 

Plain and simple.

cougar_w's picture

Be careful here. They are following laws alright, just not any of the laws on the books, and not any laws you and I must follow. Shadow laws for the shadow system that they are desperately trying to keep alive right now.

They have their own laws, courts, elected representatives, and criminal justice system. You would not recognize any of these things, but the oligarches certainly do. And notice that the Supreme Court recently tacitly recognized this in giving corporations unlimited influence into national politics.

And this shadow system is what very much needs to be dismantled.

digalert's picture

Bubble Bens right about the central banks. Last year when asked about $500 billion of our TARP money?

BBB: central banks around the world, that's where.

jeff montanye's picture

damning analysis of bernanke's words' cognitive dissonance with his deeds.  probably don't need to bring up his baldness though.  it's definitely one of his better characteristics (i.e. physical as opposed to moral).  if he looked as bad as he acted one would turn to stone watching the video.

faustian bargain's picture

He gives receding hairlines (and beards) a bad name. Kinda like what Hitler did to that little moustache.

GNH's picture

Q:  If you were stranded on a desert island, who would you want with you?

 

A:  Common answer would be someone like Gisele B. or any Victoria's Secret model.  I might take a different approach and pick a Bernanke or Geithner. Why?  I'd like to make those weak bitches beg for every coconut, every morsel of food and watch them wither and die a slow death.  Best payback I could think of for them treating the American people the same way.  BTW, still love you Gisele!

Mr Lennon Hendrix's picture

SadoMaso!  I think that was brilliant.  You wou put yourself in pain (denial of desire) so to teach another a lesson.  You are the BIG.

Cookie's picture

Goodbye America, it was nice knowing you, for a while at least

chindit13's picture

Bernanke just bides his time parrying with mosquitoes such as Paul or Bacchus, while awaiting the lavish and sycophantic praise bestowed upon him by drooling cadavers such as Paul Kanjorski, or bubble-butt adolators like Steve Liesman.

Bernanke, whom I'm guessing sits there and fantasizes about being whipped by a six foot nine inch transvestite in stilettos, never breaks a sweat.  He knows where the real power lies, and it is not with the likes of Ron Paul.  Q&A's such as this are just dog and pony shows, a bone tossed to the rabid.  Bernanke and his ilk do not fear the impotent.

Nothing will change unless the angry and disenfranchised and truly patriotic stand up and change it, by whatever means necessary.  The system will not heal itself, nor can the system be healed by working within it.  If that is not clear after two years, the masses deserve whatever Bernanke and his cohorts wish to thrust upon them.

cougar_w's picture

Substitute every reference to "Bernanke" with "King George" and you will notice that we have definitely been here before.

Of course in 1776 the supposed impotents turned out not so much so. Much jocularity and mirth did not ensue.

Whats that smell's picture

March 18 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke criticized a proposal in the Senate to limit the central bank’s supervision to the largest financial firms, saying it would undercut its ability to spot financial risks

 

Could he find his ass with two hands?

cougar_w's picture

What he probably meant to say was "would undercut its ability to use public funds to make good on private financial risks"

FEDbuster's picture

I am not a big fan of Graysons, but he is usually good at tossing some jabs at Double B. Was he there today?

Ron Paul is the only one I trust in Washington, D.C.  I truly believe he was our last chance to save what's left of the Country.

faustian bargain's picture

Fucking fuck fuckers! Fuck! That's all I have running through my head right now, reading this worthless shit dribbling out of Bernanke's pus-infested pig jowls. That shit fucker cuntbag.

Whew.

i.knoknot's picture

don't hold back, what do you really think?

heh

DavosSherman's picture

Thanks, you saved me some typing! +1

Popo's picture

I almost laughed when Bernanke quipped: "Central Banking is an Art"

LOL?

This comes from the mouth of a man who by his own repeated statements, had zero knowledge of the housing bubble, and thought the US economy was healthy just months before it went over the cliff.

Yeah. It's an "art". Unfortunately, we need it to be a "science", asshole.

chindit13's picture

If Central Banking is an art, then Bernanke is the equivalent of someone who paints tigers on black velvet and sells them Saturday mornings in the lobby of the Holiday Inn.

Ned Zeppelin's picture

I was thinking more like the paintings of kittens hanging on to a tree limb for dear life, amusingly unaware that an enormous soft pile of FRNs below them would prevent any injury should they lose their grip and fall.

FEDbuster's picture

This is what crossed my mind (youtube will take this down shortly due to nudity):

http://www.youtube.com/watch?v=q9y6yiLN72Q

hidingfromhelis's picture

Yeah. It's an "art". Unfortunately, we need it to be a "science", asshole.

Remember, patronage wasn't necessarily bestowed on the best artists, but more likely on those who fawned over their masters and portrayed them in ways that fed their egos.  BB is just serving his patrons, albeit primarily in a financial sense.

i.knoknot's picture

+10

and it's probably "god's work" too...

MarketTruth's picture

Why, truly i am asking WHY are people still even listening, let alone actually believing anything Benjamin Shalom Bernanke says? If he was a trader or fund manager on Wall Street he would have massive losses in his portfolio and virtually no one would be his client.

Ben Bernanke Video
How wrong can one man be?

www.youtube.com/watch?v=HQ79Pt2GNJo

Rick64's picture

They should've played this in an ad before Bernanke was re-elected.

Tic tock's picture

Does anyone believe that this basking in currency corruption will be tolerated by Bond-holders? -Well, apparently..as PIMCO have some sizeable long positions. The only two sensible responses I have to my ow question is either that I am wrong, or that PIMCO is day-trading... two cents anyone?  

Hansel's picture

First, Pimco is now the biggest fund, so in certain markets and for certain periods of time they are the market.  Second, Pimco is just another rent seeker, so they will get a cut no matter where the money is.  Lastly, they have been so intertwined in the debt markets for so long that it is almost entirely what they know.  They're funds, now ~$220B, are so large that they have to be in the market and take whatever consequences that come with that.  They can't daytrade $220B; they will always have market exposure.  They can't move all their money out of the banking system and into gold, as ZHers and smaller fish have done.  $220B would buy roughly 2/3rds of the U.S. claimed gold reserves at todays price. 

In terms of how much bondholders will tolerate, IMO the bondholders who will say "enough" first will be the sovereign wealth funds and foreign governments.  The action will be a political policy response on the part of governments, and the U.S. will do its best to mask what is happening for as long as possible.  I doubt Pimco will be a first responder.  Those are some of my haypennies for you ponder.

Catullus's picture

Behind the scenes the Fed must be getting very nervous and annoyed.  Remember that it's easier to get information from the CIA than it is the Fed.

But to Ben's point about every country in the world uses a central bank to make a decision about money supply:  this is the United States' THIRD attempt at central banking.  And there seems to be a high correlation of catastrophic currency destruction and central banking.  Such a high correlation that catastrophic currency destruction before central banking was almost exclusively limited to war-time scenarios. At least before central banks, the sovereign of the land had to at minimum collect all the coins in order to clip them.

cougar_w's picture

+1

Everyone else: Know. Your. History.

Bryan's picture

If the corruption is so blatant, then why does it continue on and on?

Cognitive Dissonance's picture

It would seem obvious that once the corruption is exposed, "we the people" would change it ourselves, not vote for the next superficial telegenic leader who tells us what we want to hear. Since this isn't happening, one must examine "we the people" to understand why. It all begins with people living the inauthentic life, living the lie, not willing to look within and confront the beast that lay within.

The more we wish to remain in denial of who and what we are, the more infantile we become, the more we whore our "freedom" (which we really don't want to begin with) or more accurately our liberty to those who promise they will protect us from ourselves.

Or something along those lines. :>)

cougar_w's picture

We have been in the "bread and circuses" phase for a long time. The corrupt ensure the participation of the masses by giving them small gifts. Like credit cards to make up for low wages. And easy NINJA home loans to make up for not having a financial future of any kind at all ever period.

It worked. The corruption went on for 30 years.

However it seems now like the game is up. So it will not go on for another 30 years, perhaps not even 3 years.

Though at that point we'll all be too busy struggling to survive the ongoing riots and the migration of wretched masses to take any personal satisfaction in the collapse of corruption.

DavosSherman's picture

The entire thing is lunacy. These idiots are asking other idiots questions when they should have abolished the Fed in 1914, 1930, 1937, the 1960s and again in 2008.

They will never learn, or stand up for what is right or in the Constitution.

cougar_w's picture

They are not idiots in the least. You just cannot tell what the foosh they are up to. Nor can anyone else.

When someone with ultimate power over your ability to survive is in motion and using that power, and they are not telling you what they are doing and it does not appear that they give a solitary crap about your exitence, I suggest it is past time to be very afraid.

crosey's picture

Ben's testimony nails down my opinion of his policy and approach.  HIS IS ALL ACADEMIC AND THEORETICAL.  The myriad inabilities to connect his ideas with probable practical outcomes are extraordinarily remarkable, for a person in his role.  With each of his utterances I am more convinced that he is flying along at 10,000 feet, and not the 40,000 feet necessary.  Moreover, I don't believe that he has the skills and ability to fly at 40,000.  Notwithstanding, beyond Mr. Volcker, I don't see anyone on Obama's roster with this ability.  That scares the hell out of me.  We're in real trouble.

TPTB cannot see the long term....yes, I know, that's a moot and rhetorical observation.

I don't think that they're as much idiots, as incapable.

We're idiots if we continually elect incapable leaders.  They cannot do the job, and they delegate to people who cannot do the job.

Hansel's picture

Or, Ben's job is to provide cover for all the Fed's operations by dazzling people with bullshit.  Maybe he is just the spokesperson for the corrupt organization.