"Audit the Fed" moves closer to fruition

"If you care about transparency of the Fed, you would allow a look at monetary policy," Paul said. "We're dealing with trillions of dollars that doesn't get audited. There is no reason why the world can't know, eventually, what the Fed is doing."  Ron Paul

The "Audit the Fed" legislation moved one step closer to fruition as The House Financial Services Committee approved the measure to be tacked on to a bigger bill.  It's funny how politics works.  HR 1207 (the original "Audit the Fed" legislation) was gutted by Congressman Mel Watt from North Carolina (who received 35% of his monetary contributions from the finance world).  A new measure was introduced, which was approved over the objections of Committee Chairman Barney Frank.  The vote on the overall bill is scheduled for December 1.

http://www.marketwatch.com/story/panel-votes-to-audit-feds-balance-sheet-2009-11-19?siteid=rss&rss=1

Small Business lending is Down....Duh!

If the U.S. government supposedly knows what is best for its citizens, then why does it take so long for it to understand what is going on down on Main Street?  U.S. bank lending volume to small businesses has dropped precipitously.  Ask any small business owner.

What I don't understand is the rationale behind some of the U.S. government's financial decisions.   TARP money is taxpayer money (albeit, borrowed money).  TARP money was lent to some banks, lost by some zombie U.S. auto manufacturers, and got burned up (in AIG's case).  TARP money succeeded in boosting the weak capital positions of U.S. banks.

Now, the U.S. taxpayers that own small businesses are asking for LOANS (not handouts, bailouts, or giveaways) and yet there is no response from upstairs.  A small business can't hire new employees, take on additional inventory, finance its accounts receivable carry, or conduct a myriad of other growth initiatives without bank loans.

The U.S. government forced certain U.S. banks to accept TARP money because of the 'image" it portrayed to us sheeple.  Now, the U.S. government should force these banks to make small business loans in an effort to get the economy moving again.


http://money.cnn.com/2009/11/16/smallbusiness/small_business_loans_evaporate/index.htm

My Musings about the Art of Bowing

It's not related to finance, but it is a topic on my mind.  Our Commander-in-Chief was photographed bowing to King Abdullah of Saudi Arabia.  Obama denied bowing.  Our Commander-in-Chief was photographed bowing to Emperor Akihito of Japan.  Obama didn't deny bowing this time.  This is not about who our Commander-in-Chief is at the present time.  I could care less; this is a matter of principle.

What is it with bowing?  In my opinion, our Commander-in-Chief should never bow to any foreign leader, regardless of customs.  The customs are theirs; not ours, not American.  The United States of America earned the right to stand tall in the world by bravely shedding the blood of its citizens to preserve freedom.  The examples of American sacrifice are numerous.  I am sure that I don't need to refresh anyone's memory.



In my opinion, the only people that our Commander-in-Chief should ever bow to is the U.S. military (who continue to risk their lives to provide security and to uphold the Constitution) and the taxpaying American citizens that continue to keep the U.S. viable.

The Federal Reserve Bank's Stupidity: It's all coming out in the wash...

I am fascinated by today's events regarding the proposed legislation sitting in the House of Representatives (HR 1207 Audit the Federal Reserve Bank).  Congressmen (both Democrats and Republicans), who were previously against this legislation, are jumping on the bandwagon left and right!  I wondered why, all of a sudden, the about-face.

Well, it didn't take long to get the answer.  Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program, issued a scathing report yesterday regarding The Federal Reserve Bank's ill-advised and questionable tactics with the TARP money.  Mr. Barofksy points out that most of the TARP money was mismanaged and will never be repaid.  Wow.  Finally, someone bold enough to tell the truth and stand up to the system.  Mr. Barofsky, thank you for doing the job that you were hired to do. 

Below are the links to two articles (Bloomberg and The Associated Press).  Also, please find the link to Mr. Barofsky's October 21, 2009 report.  When Mr. Barofsky's new report gets posted on the SIGTARP website, I will post that link as well.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a44MGDYGcZHk&pos=3

http://www.google.com/hostednews/ap/article/ALeqM5iHHRxlVYlcfFJsiM27Oi-wQ2cYKgD9C25T6O0

http://www.sigtarp.gov/reports/congress/2009/October2009_Quarterly_Report_to_Congress.pdf

Swiss banking secrecy is no more.....

I have been following with great interest the blockbuster story between the U.S. government and the Swiss government.  It is a story that exploded on the news scene with massive coverage by the mainstream media and then died a quick death.  Information has been scarce, but the "web" at least provides updates from overseas.  Here is my understanding of the story.

UBS is a global financial institution and Switzerland's largest bank.  A U.S. whistle-blower employee from Union Bank of Switzerland (UBS) went to the U.S. government and told them a story.  The story was that UBS' U.S. wealth management division was soliciting U.S. clients.  No big deal here; as it is all common knowledge.  The wrinkle was that UBS' wealth managers were not only telling, they were showing, U.S. clients how to move their money overseas and evade U.S. taxes.

The U.S government then called UBS and told them that if UBS did not surrender the names of the suspected 52,000 U.S. citizens at once, the Federal Reserve Bank would revoke UBS' banking license in the U.S.  Losing a huge market like the U.S. market was too big of a risk for UBS, so UBS agreed to disclose names and pay a fine of $780 million dollars.

Wait a second.  The Swiss government caught wind of the proposed deal and told UBS that it was in violation of Swiss law.  The Swiss government threatened to seize UBS client data to prevent UBS from disclosing it to the U.S. government.  UBS went back to the U.S. government, with hat in hand, and said sorry, no deal.  The U.S. government then sued UBS for fraud.

Now, the stakes are raised to the maximum.  The case was very close to going to trial when all of a sudden, a compromise was reached.  The Swiss agreed to give up 4,450 U.S. citizens (so they say) and the U.S. agreed to drop the fraud lawsuit.  Wow. That's less than 10% of the names originally requested.  The U.S. then started prosecuting the names on the list and also started an amnesty program for overseas tax offenders NOT on the list.

I wonder what led to the compromise.  I wonder how many members of the U.S. government, including U.S. Congressmen and Senators, have a Swiss bank account (it's not illegal, you know).  I wonder how Congressman Charles Rangel from New York (also the Chairman of the powerful House Ways and Means Committee) managed to amass $15 million in assets when he only makes $150,000 per year?

The interesting thing is that the UBS whistle-blower threw away his career and got three years in a U.S. federal prison for the service he provided.

So, who wins here?  The Swiss, for protecting their sovereignty?  The U.S. government, for wasting precious time and resources on a small fry issue, instead of focusing on ending wars and creating jobs?

You tell me.

Just in case we have forgotten.....

There was no infrastructure left in Iraq after the intense U.S. bombing.  No one could "wire" money and there weren't any bank employees waiting to be of service in the darkness while the bombs were falling.  I understand why this happened.

What I don't understand is why the cash was dispersed in the manner that it was.  My point is that billions upon billions of taxpayer dollars are thrown in the trash with no economic benefit to the U.S. taxpayers.  Refresh your memory with the following article and stay tuned for more examples of U.S. government "efficiency."

http://www.guardian.co.uk/world/2007/feb/08/usa.iraq1

Fannie Mae needs $15 billion....This is a joke, right?

What an outstanding investment by the U.S. taxpayers!  "Our" finance company needs another $15 billion dollars in order to stay in business.  To add insult to injury, Fannie Mae's management team offered the following gem:  "We do not expect to operate profitably in the foreseeable future."  Meanwhile, the largest U.S. commercial banks are posting record profits.

If Fannie Mae went to any one of the largest U.S. commercial banks right now and and asked for a loan, it would be summarily declined.  Private equity groups would decline to make an equity investment because there is no clearly outlined path for an exit strategy in three years.  Plus, I forgot to mention, "We do not expect to operate profitably in the foreseeable future."

Find me the "greater fool" who would be willing to make an investment in a business that is bleeding money and is telling you up-front, "We do not expect to operate profitably in the foreseeable future."  If you would be willing to do so, please feel free to comment as to why.

Why should the U.S. taxpayers even consider making this type of investment?  The Chrysler bankruptcy cost U.S. taxpayers $7 billion, GM so far has cost $15 billion, AIG will never repay $180 billion dollars.  The list goes on.

Inflating the money supply and making stupid investments will come back to haunt the U.S. in the form of more expensive goods and high interest rates.  I am not pulling this information out of thin air.  History has shown that this is what happens after the The Federal Reserve Bank floods the economy with massive liquidity and keeps interest rates artificially low.

I offer one solution.  If the U.S. government insists on having a government sponsored entity, at least merge Fannie Mae and Freddie Mac and find someone that knows how to run it profitably.  It is foolish to have two of these zombies bleeding the U.S. taxpayers to death.

Why does the U.S. government insist on "good corporate governance" for private sector corporations, but insists on doing the exact opposite?  When is enough, enough?

http://finance.yahoo.com/news/Fannie-Mae-seeks-15-bln-in-US-apf-328804811.html?x=0