Stimulus Bill Allows Federal Reserve To Conduct Meetings In Secret (#GotBitcoin?)
Gives Fed $454 Billion Slush Fund for Wall Street Bailouts. Stimulus Bill Allows Federal Reserve To Conduct Meetings In Secret (#GotBitcoin?)
The U.S. Senate voted 96-0 late yesterday on a massive bailout of Wall Street banks versus a short-term survival plan for American workers thrown out of their jobs – and potentially their homes. The text of the final bill was breathtaking in the breadth of new powers it bestowed on the Federal Reserve, including the Fed’s ability to conduct secret meetings with no minutes provided to the American people. The House of Representatives has yet to vote on the bill.
The bill provides specific sums that can be made as loans or loan guarantees to passenger airlines ($25 billion), cargo airlines ($4 billion), and loans and loan guarantees to businesses necessary to national security ($17 billion). But when it comes to the money going to the Federal Reserve and then out the door to Wall Street, the legislation says only this:
“Not more than the sum of $454,000,000,000…shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system….”
Why does the Federal Reserve need $454 billion from the U.S. taxpayer to bail out Wall Street when it has the power to create money out of thin air and has already dumped more than $9 trillion cumulatively in revolving loans to prop up Wall Street’s trading houses since September 17, 2019 – long before there was any diagnosis of coronavirus anywhere in the world.
The Fed needs that money to create more Special Purpose Vehicles (SPVs) — the same device used by Enron to hide its toxic debt off its balance sheet before it went belly up. With the taxpayers’ money taking a 10 percent stake in the various Wall Street bailout programs offered by the Fed, structured as SPVs, the Fed can keep these dark pools off its balance sheet while levering them up 10-fold.
White House Economic Adviser Larry Kudlow acknowledged plans by the Fed to leverage the money at a White House press briefing this week, stating that the money the Treasury is handing over to the Fed would result in “$4 trillion in Federal Reserve lending power.”
The Fed has already created one of these SPVs. On March 17, the Fed said it was creating a Commercial Paper Funding Facility (CPFF) that would work like this:
“The Treasury will provide $10 billion of credit protection to the Federal Reserve in connection with the CPFF from the Treasury’s Exchange Stabilization Fund (ESF). The Federal Reserve will then provide financing to the SPV under the CPFF. Its loans will be secured by all of the assets of the SPV.”
The Fed also used SPVs during the 2007-2010 financial crisis to buy toxic debt from Bear Stearns to facilitate its takeover by JPMorgan Chase and to prop up AIG, a giant insurer that had gorged on Wall Street’s tricked-up derivatives. Those programs became known as Maiden Lane I, II and III.
Adding to the suspicions that the Fed doesn’t want to have to battle Freedom of Information Act (FOIA) requests (sunshine law requests) again in court, as it did and lost during the last financial crisis to keep its outrageous $29 trillion bailout program to Wall Street a secret from the public, the Senate-approved stimulus bill repeals the sunshine law for the Fed’s meetings until the President says the coronavirus threat is over or the end of this year. That could make any FOIA lawsuits to unleash details of what’s going on next to impossible since it has been codified in a federal law. The bill states the following:
SEC. 4009. TEMPORARY GOVERNMENT IN THE SUNSHINE ACT RELIEF. (a) IN GENERAL.—Except as provided in subsection 8 (b), notwithstanding any other provision of law, if the Chairman of the Board of Governors of the Federal Reserve System determines, in writing, that unusual and exigent circumstances exist, the Board may conduct meetings without regard to the requirements of section 552b of title 5, United States Code, during the period beginning on the date of enactment of this Act and ending on the earlier of— (1) the date on which the national emergency concerning the novel coronavirus disease (COVID–19) outbreak declared by the President on March 13, 2020 under the National Emergencies Act (50 20 U.S.C. 1601 et seq.) terminates; or (2) December 31, 2020.
This could mean that the American taxpayer may never learn why it went into debt to the tune of $454 billion if no records are being maintained.
Wall Street’s mega banks and their primary regulator, the Federal Reserve, are no longer just a threat to the safety and soundness of the U.S. banking system — together they are an unparalleled and unprecedented threat to the idea of democracy as we understand it.
We find it difficult to believe that Senators Bernie Sanders, Elizabeth Warren, Sherrod Brown and Jeff Merkley would vote in favor of this legislation – given their in-depth knowledge of what the Fed did during the last financial crisis. The public deserves an honest explanation from each of them.
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