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On February 7, 2009 Bernanke Admitted What It Was All About
Back on February 7, 2009, one month before the Fed unveiled its massive (for its time) first episode of Quantitative Easing, the Federal Reserve was flailing. And, as revealed today by the latest annual batch of Fed transcript releases, precisely one month before the Fed commenced monetizing tens of billions in government debt and MBS, Bernanke held perhaps the longest conference call in the Fed's history (the transcript alone is 65 pages) in which he revealed that he was working on something entirely different: an "aggregator bank" concept, which would have been essentially a quasi-nationalization of the US banks whereby Fed funds is commingled with the bank's capital in order to avert public attention from the trillions of bad assets on the bank books.
It is during the discussion of this plan, which mysteriously disappeared from the Fed's plan of action between February 7 and a month later, when America set off on its path from which 7 years later it is still unable to ween itself (and in fact now everyone else is also pursuing QE), that we learn for a fact precisely what most have suspect if not known for a fact, namely that the resulting "bailout" of the US economy by way of QE was nothing more than a way to keep bank shareholders "thrilled."
From the February 7 transcript:
The purpose of the meeting today is for me to discuss with you the Treasury’s proposed financial stabilization plan and, in particular, the Fed’s proposed role in that overall structure. This is a “close hold.” There have been a number of leaks, as often happens, which is very counterproductive; but I think the Fed has done well, and I would not like those leaks to come from the Fed. So I appreciate your keeping your confidence close.
We have been discussing, and by “we” I mean primarily the Treasury, the Federal Reserve, the FDIC, and the OCC, the last week or so—with a lot of staff work before that—a plan that Secretary Geithner will propose on Monday at 12:30 in a speech at the Treasury. They have been very wide-ranging discussions, and, frankly, there was little in the way of resolution or focus until very recently—only in the last 24 hours or so have we begun to see where Secretary Geithner wants to take the plan; in fact, we got a very substantial revision of the document this morning at 9:15, so you can see this is very much a work in progress.
But given the schedule for Secretary Geithner to announce the plan on Monday, I thought this was an opportune point for us to review the plan and the Fed’s potential role. As you’ll see when I go through the plan with you, the details are fairly lacking. There is an overall structure. That, in part, is on purpose. The political strategy is to provide an overall structure with some detail, but not a great deal of detail, with the idea that the public discussion and the congressional discussion will create some buy-in on the political side. It’s like selling a car: Only when the customer is sold on the leather seats do you actually reveal the price. So the strategy, again, is to provide the framework to get the Congress involved within certain parameters, and then, only when there is some consensus on how the plan will work and what the key elements will be, to negotiate whether additional funding beyond $350 billion is necessary.
But I think there are some advantages to that from a political point of view. I will say that both I and the staff—Bill Dudley and others—are somewhat concerned, at least given the way things stand now, about the market reaction. First, the lack of details will create some uncertainty and concern, particularly because there’s not a great deal said about the “problem children,” the BAC and Citi. Secondly, I think the markets will be disappointed in the following sense: As I will describe, this is a real truth-telling kind of plan. It’s fundamentalist. It’s not about giving the banks a break. It’s not about using accounting principles to give them backdoor capital. It’s very much market-oriented and “tough love.” And I think we all will like that. I like that. But the banks’ shareholders aren’t going to be thrilled about it.
Beautiful!
For one brief , fleeting instant, the Fed was willing to do what is right, and no only not halt Mark to Market (the Fed itself admits accounting gimmicks boost banks), but force banks to recognize their losses without "giving them backdoor capital" - something else the Fed now admits to doing. But the reason why the Fed's plan would have been applauded is that as Bernanke says it is "market-oriented" and "tough love."
But most importantly, the Fed revealed what the overarching motive behind the entire economic "bailout" has been- in other words what it was all about: the banks’ shareholders.
And.... he was right, even if he "liked it." Because someone else apparently did not.
Precisely one month later, unclear why, the Fed changed course 180 degrees, and instead of dispensing "tough love" and going with a market-oriented means to fixing the economy, one which however would have wiped out all bank shareholders, Bernanke unleashed central-planning unlike anything even seen in the USSR. Not only that, but we also know what QE is by what it isn't:
- It isn't a "real truth-telling kind of plan
- It isn't "fundamentalist"
- It is "about "giving the banks a break"
- It is about "using accounting principles to give the banks backdoor capital"
- It is about "non-market oriented and unquestioned love"... by the Fed.
In short, it is why 6 years later bank shareholders couldn't be more "thrilled" with QE.
As for why it hasn't worked for everyone else, well, one can only imagine the kind of "meticulous attention" to detail the Fed uses if, on its official transcript, it made the most epic, glaring error possible. Because it would appear that in the eye of the Fed, QE is now even distorting the days of the week...
Source: Fed
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The Federal Reserve Banks' or the problem child banks' shareholders? Because to a great extent they are one and the same.
Yep, same entity, precisely why it is all bullshit and there is no bond market.
Full faith and credit...
EX: See The Federal Reserve Bank
>>>> End the Fed Now !
>>>> Carry On...everything's great !
Self-regulation...in plain daylight...Foxes guarding the hen house.
Ben knew that the vast majority would not like it when he took care of the Fed's primary shareholders - as he did:
http://www.safehaven.com/article/35298/do-jpm-and-citi-control-the-ny-fed-and-us-monetary-policy
Just to back up a minute, guys... do you think there's a reason they floated that shareholder-killing idea? It was a WARNING of what would happen if anyone stood against the idea they knew they wanted in the first place- QE, the orginal one.
When 5 months earlier Hank Paulson and Ben Bernanke walked up the Hill arm-in-arm and said "give us 3/4 of a trillion dollars of taxpayer money by Friday or we're all dead" their story was that they were going to buy "toxic assets" out of banks. But when given the money they "suddenly realized" they could get more bang for the buck if they used it to RECAPITALIZE those banks instead. The actual buying of toxic assets (MBS) didn't happen until QE3 (for which they did NOT seek congressional approval).
DO YOU SEE A PATTERN BOYS AND GIRLS?? FLoat one story, do another. The one you originally wanted to do in the first place.
I wish I couldn't remember this shit. I really wish I could forget. But I remember August 2008-March 2009 like it's burned in my DNA. Every damned bit of it with sparkling clarity. I was watching the death of whatever tenuous links our country still hand to capitalism be severed. When you watch something you love murdered in front of your eyes, you don't forget something like that.
The cones were out, yet the moral hazard was struck with the gas pedal jammed to the floor.
Yet when you talk to people about that today all you get is a thousand yard stare (or if you prefer, a deer in headlights).
Most Americans are in Deep Outer Space.
You know when your troubles started? When you lost your ideological enemy. The implosion of the USSR was the start of your downfall. Financial and political crooks took over and ideology was replaced with hubris and arrogance. Pity, because when you Americans put your mind to something, you really are capable of impressive endeavours.
And the EU cannot replace you, because we will remain a divided house for many years to come.
You may be right about that.
While the details are a bit muddy in this transcript, what I see is a Fed Chairman, namely Ben Bernanke being "managed" by a political appointee, U.S. Sec. Treasury (or is that Sec. Treasonry) Timbo Geithner, ex Goldman Sachs, ex- NY Fed governor. This hints that perhaps Ben was the fall guy and the real culprit sits as the prez of Warburg Pincus. Pay no attention to the flashing lights - its the man behind the curtain who pulls the strings. This is a more telling post than most.
I can't see any other reason why the fucking bankers and financiers keep getting as much free money as they wnat (QE and ZIRP).
Makes about as much sense as any other explanation out there.
Crimes against humanity. Bernanke is the same as any common war criminal.
if this was 200 years ago, he would hang.
I hope I live long enough to see his head on a pike.
When Bernanke dies I swear I will drive to his grave and piss on it. I will stay for a month and piss on him daily. Fucking cocksucker. Vermin like Brnanke and Geithner deserve public execution
If this was 200 years ago, his skill set would have made him an utterly unknown wig maker or stable boy.
This is far from over with the debt now growing exponentially under Obama and because of a compliant Fed who allows this to go on and on.
Short the FED fuckers, stack bullion. Become Civilly Disobediant to government subsidized banker criminals. Let the unknowing meat puppet masses scream like sheered sheep when reality sets in.
Feb 7 was a Saturday. Day of the Shabbat. What was the Bernank doing out of bed?
What was he doing out of the Oven, isn't that what you meant to say?
Delete
What can be done to rout out a den of vipers and thieves?
They are taking this opportunity to get their power back also....the bankers want to be above the Hedge funds and the private investment firms...which they were not before the crisis...now they are....not all..just the big TBTF banks..if you are a mid sized Midwestern bank..they will regulate you out of business..you will not be able to afford all the attorneys and accountants to keep up with the rules and forms...so you sell out...
"Precisely one month later, unclear why, the Fed changed course 180 degrees,"
oh, it was clear. Crystal clear
april 2009 FASB updated FASB 157 to allow banks to mark to model assets rather mark to market.
Presto
accounting fraud legalized
Not to mention the FED's $4 trillion+ dollar balance sheet.
Marked to Unicorn...
LOL "Marked to Unicorn" I logged in just to upvote that.
I got a 1099 from Chase where I keep a small account, 8-10 grand or so.I got 82 cents in interest for the year. In other words,
hundreds of my dollars went to wall street shysters to bid up the price of things I use on a daily basis, plus housing. Bernanke /vinair/blankfein/dimon/kkr/schwartzman et al are the greatest thieves of all time.
Hundreds? They took your 10K cash, levered up 50:1, and then used that to bid up the price of everything.
You actually gave them more like 500K to screw you with, and when they fail - you won't get the 10K back either.
"It’s like selling a car: Only when the customer is sold on the leather seats do you actually reveal the price"
That should tell you all about the mindset of the con artists who sit at the Fed. It's also true of the bailouts of the PIIGS at that time, deliberately understating the bailout amounts to sting the creditors a couple of months down the line. Same playbook, different continent.
Well, it seems they graduated from second-hand car sales cons to full out systemic fraud to enrich themselves (as shareholders). Dress it up any way you like, if it smells like theft, looks like theft, and feels like theft. Guess what? It is theft.
It’s not about using accounting principles to give them backdoor capital. It’s very much market-oriented and “tough love.” And I think we all will like that. I like that. But the banks’ shareholders aren’t going to be thrilled about it.
When you understand that every Federal Reserve Note aka $1 - $100 bill is nothing more than a paper stock certificate then the statement makes complete sense who the shareholders are that got stiffed. The 'banks' are not 'shareholders' just distribution centers like stock exchanges.
It is about bending the taxpayer over and slamming the bigest object in the room right up the ass Ben , Janet Barry, nancy and Harry. And now the Republicans are showing that they were just as guilty
just now, oh, ok.
This is such a beautiful case study of how debaucherous our government and society has become. There was a time that Americans confronted their problems and worked on solving them. There was a sense of right and wrong and shared interest in accountability for poor decision making.
But that was then and this is now. Today, we lie to ourselves about our problems. We blame our own problems on others. We're all victims. Helpless victims who DESERVE to be helped regardless of our own culpability. If we're forced to act (only in true crisis situations), we will do the most expedient thing possible to "fix it" and return to our entitled state of affairs.
Facts remain what they are. You can pretend they don't exist or become accomplished in hiding them, but they remain. At some point, facts will matter. And the fact that the Federal Reserve had the opportunity to "do the right thing" but chose the exact opposite will at some point unleash profound, unintended consequences significantly worse than the situation they had first confronted.
This is Exhibit "A" PROVING that the Fed is NOT independent of Government. Geitner's "Plan" and the Fed's "role" in it!! THEREFORE, the primary argument against auditing the Fed (to maintain independence) is BULLSHIT. Even without this proof, the argument that an entity can only remain independent if it is not audited is complete BULLSHIT! The argument made no sense to start with. But now we have proof that not only is the argument UNSOUND, but it starts with a FALSE PREMISE! (That the Fed is, in fact, independent).
silly Saturday ....silly me
Chairman Bernacke...........you will NOT get that mortgage.....post-retirement ...for even thinking of all this!
and notice.....Bill Dudley and others to the rescue.
What a great country...where Rahm Emmanuel is Mayor of Chicago and young black males destroy each other because the drug corruption is so bad not even the police can intervene.
March Rich pardoner-enabler Judge Eric Holder....why not pay some attention to the scandal of young black male deaths (with innocents as cross-over) in Chicago......and attempt a serious prosecution of Jon Corzine.
Malakies lene.
O bernanke eine bousti ke to perni sto kolo.
It's great that this was posted at about the same time as news of the Chairwoman's speech about the bad behavior and corrupt culture of the banks. In my view, the banks have completely duped the fed by creating emergency where there is none so that they can "capitalize" (not to be confused with the use of capital) on the situation leaving us again on the brink of collapse but with all the bad actors in a much better financial position to ride it out and congratulate themselves on America's "meritocracy".
The FED is owned by its stockholders. In general this is 12 FED districts, with NY (wall street) Fed being supreme. TBTF banks are also owners.
The FED is an agent of its owners. It is a stock owned corporation with many original owners still being paid.
Until Wright Pattman, the FED kept all of its profits and distributed them to owners. Now, it keeps what it wants, and rebates the rest to Treasury. Even in times of inflation, stock owners are guaranteed profits above the original 3%.
Original owners were revealed by Eustace Mullins. Yes, they are mostly Jewish families, in many cases affiliated with Rothschild.
Also, be advised in Eustace Mullins original book on Federal Reserve he shows how Gold Bankers maneuvered (to create FED) so they could have credit power transferred to them by legal fiat.
Edward Griffin's "Creature from Jekyll Island" is a direct rip off of Mullins work. Griffin then shills for gold, contravening Mullins warnings.
This is how sneaky and depraved money power agents are. They will hypnotize a population with subtle lies. Griffin poses as a FED basher, but instead is playing a dielectic.
The sheeple are just mice between cat's paws, being bounced back and forth.
The real answer is legal money. Nobody talks about, so private credit making corporate bankers win. The hypnotisim continues.
The notion that government somehow owns money power is ludicrous. Government gave it away and is subordinated. If government really owned money power, they would have simply legally canceled onerous debts. Then they would have direct spent floating money into productive channels.
Bankers don't want direct spend of government fiat, because that money type will vector into banker ledger and decrement it to zero. Then they lose their easy life of usury and magick control.
With legal money, the U.S. would be turning and burning and be very wealthy now. Labor would be producing at maximum capacity.
What is not discussed is what is important.
www.sovereingmoney.eu
A moment of clarity before staggering back into the saloon and ordering another shot of rot-gut.
repeal 1913 is what the fuckers should do