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Financial overhaul bill clears hurdle, moves to full House

Redress

Redress

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Financial overhaul bill clears hurdle, moves to full House - Yahoo! News

Mcclatchy Newspapers – 49 mins ago

The broadest revamp of financial regulation in seven decades cleared a key congressional committee Wednesday and will move next week to debate on the floor of the House of Representatives .

On a 31-27 party-line vote, the House Financial Services Committee passed the Financial Stability Improvement Act.

The measure addresses much of what led to the recent financial crisis, including insufficient government powers to shut down in an orderly fashion huge financial firms that are deemed too big to fail because they're interconnected globally.

The committee bill would create so-called "resolution authority," allowing the federal government to dismantle such huge financial firms, which it was unable to do when Lehman Brothers collapsed in September 2008 .

Days later, the Federal Reserve used creative tools of questionable legality to save insurer American International Group and pay off its biggest creditors, which were mainly Wall Street banks.
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I will be the first to say I don't know enough about economics to really really comment without sounding stupid, but I thought this was interesting. Thoughts?

I did find this part interesting/amusing:

Republicans may try to reverse a controversial amendment added by one of their own, Rep. Ron Paul of Texas . He capped a 25-year crusade with passage of a provision to have a government audit of the independent Federal Reserve, including its conduct of monetary policy.

Republicans were so against this audit idea that in 2003 they abolished a subcommittee to deny Paul the chairmanship of a panel that had oversight of the Fed.
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I actually agree with Ron Paul's FED audit....In fact I think every inch of Government should be audited to see where our tax dollars are going.
 
Strucky said:
I actually agree with Ron Paul's FED audit....In fact I think every inch of Government should be audited to see where our tax dollars are going.
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The Fed is already independently audited. I do not know how much effect this will have as congress cannot even keep their own books in line.
 
Goldenboy219 said:
The Fed is already independently audited. I do not know how much effect this will have as congress cannot even keep their own books in line.
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Pardon my ignorance. Audited by who, and what is done with/about the audit results?
 
Redress said:
Pardon my ignorance. Audited by who, and what is done with/about the audit results?
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By a private accounting firm. From the Fed:

The Board of Governors and the Federal Reserve Banks annually prepare financial statements reflecting balances (as of December 31) and income and expenses for the year then ended. The Federal Reserve Bank financial statements also include the accounts and results of operations of several limited liability companies (LLCs) that have been consolidated with the Federal Reserve Bank of New York (the "consolidated LLCs").

The Board of Governors, the Federal Reserve Banks, and the consolidated LLCs are all subject to several levels of audit and review. The Reserve Banks' financial statements and those of the consolidated LLC entities are audited annually by an independent audit firm retained by the Board of Governors. To ensure auditor independence, the Board requires that the external auditor be independent in all matters relating to the audit. Specifically, the external auditor may not perform services for the Reserve Banks or others that would place it in a position of auditing its own work, making management decisions on behalf of the Reserve Banks, or in any other way impairing its audit independence. In addition, the Reserve Banks, including the consolidated LLCs, are subject to oversight by the Board.

The Board of Governors' financial statements are audited annually by an independent audit firm retained by the Board's Office of Inspector General. The audit firm also provides a report on compliance and on internal control over financial reporting in accordance with government auditing standards. The Office of Inspector General also conducts audits, reviews, and investigations relating to the Board's programs and operations as well as of Board functions delegated to the Reserve Banks.
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FED
 
Yep, and the only things that are audited are the loans to and from the banks. The audit is a formal pat on the back saying that the columns all add up. Any specifics and all decisions by the FED are classified by the FED as pertaining to the financial national security and are NOT audited. So as long as the FED says they spent x dollars and the columns total to x then the audit is a success.

So the FED is a black box - able to generate money from thin air to give to the banks at an arbitarily set rate. This is the way that they maintain the money supply and interest rates. Typically when an audit is called of a private firm by an overseeing organisation, specifics are just part of the audit. The firm must also be able to justify each and every line item, explaining the rational and process behind each decision. This is the type of audit that Rep. Ron Paul is calling for the FED and the FED charter itself mandates that Congress - not some accounting firm - audit them annually. This has not been done in the past 30 some years - if ever.

But the FED has a lot of power among politicians because the FED controls the magical creation of money to pay for everything that the government needs or wants. If that means printing money from thin air then the FED does it. If this is a wrong impression, then a Congressional audit of the FED will allow what is really happening to be proven. Until then, the paranoids and conspirators are just as right as anyone else.
 
Let me see if I understand this correctly...

The Board of Governors hires the independent auditing firm, the audits are limited to reviewing financial statements, all the while Board has regulatory authority over those entities it controls. That gives a whole new meaning to the term "policing one's self".
 
That's a pretty good summary of the whole thing. Which is why there are many people supporting Rep. Ron Paul's call for a true congressional audit.
 
This is the one thing I am absolutely on board with Ron Paul on. I trust him in this regard.

But....he's still loony.
 
He is a bit looney - but then he is a true Libertarian with all that entails. I call myself a Libertarian simply because I really cannot stand either the Democans or the Republicrats. They are self-centered folks that only care about spending other people's money on their special projects that help out themselves and their friends.

But I do fully agree with Ron Paul on this one too. Primarily since the FED Charter states that these audits should occur annually and there has yet to be one that I know of. Secondly because the decisions reached by the FED affects every single US citizen without recourse. Thirdly because we the people have a right to know what the reasoning behind our money supply is other than personal profit by unelected power brokers and our government.
 
carlkay58 said:
He is a bit looney - but then he is a true Libertarian with all that entails. I call myself a Libertarian simply because I really cannot stand either the Democans or the Republicrats. They are self-centered folks that only care about spending other people's money on their special projects that help out themselves and their friends.

But I do fully agree with Ron Paul on this one too. Primarily since the FED Charter states that these audits should occur annually and there has yet to be one that I know of. Secondly because the decisions reached by the FED affects every single US citizen without recourse. Thirdly because we the people have a right to know what the reasoning behind our money supply is other than personal profit by unelected power brokers and our government.
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Are you not concerned about the Feds independence? The likes of congress, IMHO, are not sophisticated enough to interpret the Feds balance sheet. Congress is not an accounting firm.

However, as long as monetary policy independence is maintained, i really see no harm in congress getting a very general rundown.
 
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