Saturday, March 29, 2008

BREAKING NEWS THAT NEEDS YOUR ATTENTION

The Bush Administration is going to present a proposal for an overhaul of the Federal Reserve that will expand the power of the Fed. 

The Fed is the banker's and the government's bank. It is run by a Board of Governors appointed by the President, and answerable to no one. There are 12 regional Fed banks in major cities that act as agents of the U.S. Treasury (our currency). It is most popularly known currently as the controller of the roller coastering interest rates. And it is widely blamed for the current recession, that no one in power is willing to call a recession, that we are in.

Here's what Bush wants to do: He wants to increase the Fed's regulatory power to include the stock market  and the home mortgage industry and the insurance industry. The proponents will refer to the recent bail out of Bears Stern, the sub-prime mortgage debacle and who knows what with insurance, as the factors demanding that the Fed take these industries over. Oops, I meant to say "oversight" of these industries. 

Currently the SEC watches over the stock market; the states watch over insurance, banks and mortgages. Bush's Treasury Secretary, Henry Paulson will try to demonstrate how the current conglomeration of oversight is just too cumbersome and this clumsiness is the sole author of the country's current financial woes. 

Whether or not you agree this is a good thing or a bad thing, one thing is certain. If this passes by Congress and is approved, the Fed will have extraordinarily, unprecedented increased regulatory power over all aspects of income, borrowing, investing and currency in this country, with no oversight. They will not have to answer to anyone. There will, then, be no recourse for any citizen who might be victimized by incidents like Bear Sterns, the Savings and Loan disaster (this new proposal will do away with all thrifts), insurance or mortgage issues in the future, should the newly empowered Fed decide NOT to provide a bail out.

I visited today with my friend the college professor while our kids played. He told me that his colleague, an economics professor, says that every indicator that was present just before 1929 is present today. And that there are investment houses much bigger than Bear Sterns out there that are having bigger problems than BS had before it collapsed and turned to the Fed for a bail out. I have not yet looked into this, but it sure resonates with what other friends in finance tell me.

If you agree that giving the Fed this much power over our money is a bad thing, then we all need to get busy contacting our Congressmen and Congresswomen to tell them not to approve it. 

Because Paulson is releasing the plan on Monday. 

This Monday. 

Yup. 

Time to start dialing and e-mailing.



8 comments:

Red_Cleric said...

Haven't read too much about this but the power can't be anything compared to the previous power given to the Pres. under the emergency barking act of 1920. Those powers were called back in what we call the war-power act.

Before that Nixon et.al. had the power to declare unilateral martial law & divide the nation into military zones! After Attorney. General Richardson was fired I still remember my poli. sci prof. being concerned.

Alan

I'll check it art next day or so!

Presbyterian Gal said...

Thanks Alan,
I will appreciate hearing your input on this.

Lindy said...

I'm not sure what to think about te fed thing. There was a thing on NPR this morning that kind of made me go hummm...

I am scared about the economy though.

Presbyterian Gal said...

Me too, Lindy. Too many things going on that are just bad (like Bear Stearns and the bail out) and don't follow any logical pattern (like food prices going up 3.4 percent in January BEFORE the extreme gas price hikes....and gas price hikes when there is an acknowledged surplus just as some examples).

I don't disagree that better oversight is called for. I just do not agree that giving it to the Fed is the solution because they do not answer to anyone.

TulipGirl said...

This reminds me of what I read today over at Reforming the Culture.

Presbyterian Gal said...

Hi Tulipgirl! Thanks for that link. A good history lesson there.

Quotidian Grace said...

Hey, PG, I'm back and just read this.

Your instincts here are spot on.

Presbyterian Gal said...

Thanks QG. This whole business scares the willies outta me.