Friday, September 25, 2009

"An Unnumbered Swiss Bank Account"

I've read a lot of transcripts and watched a lot of testimony. But these questions by Rep. Alan Grayson for Federal Reserve General Counsel Scott Alvarez are some of the most trenchant I've ever seen asked of a Fed official. There's long been an understanding in Washington that you just don't confront the Fed with questions like these. Ron Paul has been a lone wolf, but during testimony he sometimes dilutes his questions with too much preamble. Grayson has been extremely impressive and he deserves recognition.

I don't know anything about Alvarez, so I'm not sure if he's playing dumb in this clip or just doesn't get it. But a potentially important problem with a Fed audit is the extent to which it will go through Alvarez or other non-principals. It's unlikely that activity such as stock market manipulation or illicit transfers would be kept on the Fed's books, at least in easily identifiable form. And having already apparently misled the Joint Economic Committee in May, Bernanke has a credibility problem and can't be trusted to make full disclosure to auditors or to his own legal department. Any meaningful audit will have to find a way around this.


Anonymous KAIMU said...


I love these "pulling-the-curtains back" moments that reveal how inept the US FED is just in the "answering-questions-in-a-competent-manner" department! You know these people are not brain-dead idiots yet when the many US FED reps stumble and look like baffoons it is only because they have so many LIES to cover up they can't keep track of them all. Only a well trained and seasoned psychopath could pull that off! I can only imagine their little "check lists" when they go up against RON PAUL and ALAN GRAYSON. The top three items listed would be "MAINTAIN" ... "MAINTAIN" ... "MAINTAIN"!

Just imagine how these same questions would be answered if this guy was actually "sworn in"! Every answer would either be I DON'T KNOW or MY ATTORNEY ADVISES ME THAT IF I ANSWER THE QUESTION I WOULD INCRIMINATE MYSELF SO I MUST TAKE THE FIFTH ...

Can you "swear in" an attorney or is that perjury just by saying "I DO"?

9/26/2009 11:57 AM  
Anonymous Anonymous said...

Usually people don't ask questions like this, it's true.

But the reason is that the questions clearly show that the questioner doesn't understand how the markets desk at the NY Fed actually works, what primary dealers do, or how monetary policy is implemented.

You cannot have a monetary policy which does not affect markets. That is the precise point of monetary policy and how it is conducted--the Fed buys and sells fixed-income securities, which influences interest rates, futures markets, and yes even stocks. Somehow that is conflated with 'manipulating' markets, as if Bernanke is sitting there in front of a terminal going long GE or some such. Which is silly--if that were the case, would we ever have hit SPX 666?

But it's grist for the conspiracy theorist mill, so it gets traction with the all-capital-letters crowd.

9/26/2009 12:37 PM  
Anonymous Anonymous said...

My hero is Harvard law professor Elizabeth Warren. Could we clone her about 100k times.

Geithner defended using the $700 billion Troubled Asset Relief Program to bailout automakers. He said both GM and Chrysler met the statutory definition of a "financial institution" to qualify for a bailout from the Wall Street rescue.

But he said the definition doesn't apply to other companies like AT&T or American Airlines.

The panel's chairwoman, Harvard law professor Elizabeth Warren, questioned why the government infused $170 billion into AIG -- and as a result investors who held securities known as "credit default swaps" were repaid in full.

But bondholders at GM and secured lenders at Chrysler lost nearly all of their investments. Geithner didn't directly answer Warren's question, but called them "different situations."

Obama administration says it is 'careful' shareholder in GM, Chrysler

There's been plenty of books written about the Federal Reserve and it's dark side. You'd think we could do better these days. HHHmm, looking at Congresses' behavior, maybe not. Maybe the Fed is the mob for rich "respectable" folks, we our knees just got wacked with a bat. It's scary that they are still swinging.

9/28/2009 1:57 PM  
Anonymous Anonymous said...

Congressman who went werewolf on me now spooks Fed officials

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…
end snippet:

Matt Taibbi has done an excellent job following the fed and the financial meltdown.

9/29/2009 6:06 PM  
Anonymous Kilfarsnar said...

Wow, that was pretty aggressive.

I like it!

9/30/2009 1:23 PM  
Anonymous judyo said...

With today's news, it looks like Grayson is out to make a name for himself whether he understands the issue or not. Be loud, be disrespectful, treat morons like morons. New normal.

9/30/2009 3:31 PM  
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