Report | Government Accountability Office (GAO) Audit of the Federal Reserve’s Emergency Actions


The Fed Audit 

WASHINGTON, July 21 –The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression.

An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study.

“As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders (I-Vt.). “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

Among the investigation’s key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. Said Sanders: “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president.”

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse.  In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.  Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.  One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. “No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed’s board of directors or be employed by the Fed,” he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo.  The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. “The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street.”

###

GAO report below…

~

4closureFraud.org

~

FEDERAL RESERVE SYSTEM
Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance

 [scribd id=60564987 key=key-14anyjvh350c09ygje9v mode=list]

 

Comments
16 Responses to “Report | Government Accountability Office (GAO) Audit of the Federal Reserve’s Emergency Actions”
  1. Carol Kidd says:

    The Federal Reserve is not the bank of the US G’vt !! It is a private cartel & has been since 1913 !! They r legalized thieves with the greatest scam going in world history !!!! We the People need 2 abolish these crooks, file 4 bankruptcy, tar & feather the politicans along with the supreme court, fire them all, & start over with the Constitution !!!!!!!!

  2. QNY81 says:

    Ivent:
    The people are funding Dr. Paul’s campaign. Check out opensecrets.org. The Dr. is called Dr. No because he never votes unconstitutionally, never votes for a tax increase, will vote to protect veterans (he served in the Vietnam War as a flight surgeion) and cannot be bought by lobbyists. The lobbyists bypass Dr. Paul. I campaigned for him in 2008 and met him twice. A real gentleman who is still with his wife of 54+ years. Remember, a man that cheats on his wife will cheat on everyone else. If he does not have loyalty to the one he swore loyalty to in front of God and his family and friends, who will have his loyalty?

  3. Plutocracy: government by the wealthy, and is also sometimes used to refer to a wealthy class that controls a government, often from behind the scenes. More generally, a plutocracy is any form of government in which the wealthy exercise the preponderance of political power, whether directly or indirectly.

  4. housemanrob says:

    This BUUULSHITTTT……………MAKES ME WANT TO HURL!!!…………..absolutely as much as I can take. What chance do WE THE PEOPLE have against this takeover of our lives!

    • Jeanette Ambrose says:

      The Constitution,the Bill of Rights…but then people have little knowledge&the Supremes have refused to Honor their Duty..ours?To overthrow the MEN who pervert the Law.Not the government,the usurpers….
      tough to tell it to those who’ve been-like myself…deliberately dumbed DOWN!!

      Sic Semper Tyrannus?

      • lvent says:

        Watch who is funding campaigns. When Obama got elected, the people really elected Goldman Sucks, the banking elite from Chicago and George Soros for President. That is why WALL STREET and the NEW WORLD ORDER has hijacked AMERICA and is running the country. Obama is their puppet. People need to do their homework. People drink the kool-aid the media serves them and they do not do their homework on who is funding political campaigns. They believe CNN and MSNBC and FOX. People have to stop being sheeple. The people have to realize the mainstream media is owned by WALL STREET who are owned by the banking cartel and the NEW WORLD ORDER. Look what happened last fall when the people believed the Republican rhetoric. Now things are even worse. People have to start thinking for themselves.

      • lvent says:

        Forget what the media polls say. They are all lies designed to mislead the people.. If someone in the media asks you who you are going to vote for, don’t tell them. CNN is saying that Ron Paul only has 3% voter support. I don’t believe that for a minute. But more importantly than that, what is his background, who is funding his campaign?

  5. talktotennessee says:

    We need another 60 minutes expose of secret bank handouts given to big banking and letting them manage or handle the transactions. Don’t you just love it?
    Where do we go to get rid of Corporate Capitalism or Banking Socialism? While our government debates another fire sale by cutting homeowner tax exemptions, Social Security and Medicare benefits, Banks are laughing all the way to the – – – -! Uh oh, where else? Follow the money.
    Thats what the GOP does. By all means don’t raise taxes on these poor banks, insurance companies, wealthy, their loopholes, etc. That might keep them from poking it to us and thwart their trickling business maneuvers.

    Example: A large insurance company, who will remain nameless here. ‘Non-profit’ mutual reduces their taxes by manipulating premiums to the point where they demonstrate loss when balanced against claims. Their actual profit is hidden in maintaining excessive slush funds aginst potential loss. These funds are not sitting in banks waiting for disaster claims or your next accident. The money is invested in everything, stocks, real estate, bonds. hedge funds, etc. etc. Ladies and Gents, this is the source of their REAL profit. Their taxes are based on how well they manipulate the investments. Capital gains, contributions, propaganda couched as charity, and other methods of reducing tax burden, boosting profit while demonstrating technical “losses” on their premiums is the real game.
    Profit is defined as how money is used. This company and millions like them escape fair share of taxes every day while the man on the street loses his earned benefits like SS, Medicare and home exemptions, not to mention watching his home devalue with their mistakes and fraud.
    If you are rich or own a big business, you earned the right to be a Republican and part of the problem.
    Why are the rest of you voting for candidates in this party?

    • Jeanette Ambrose says:

      I don’t see that one’s political”party” affiliation is the root,both”sides”-elephant and jackass are in cahoots with tha banksters;and there is nothing inherently wrong with being”rich” or”owning a big business”,nor is being “poor” and being a slave employee a sure bet of”moral”-we are facing the corruption of the currency via an usurpation of the Supreme law of the united States(all guaranteed a Republican form of government)…we must-MUST-set aside this infighting and focus the laser Light upon the scoundrels…Congress coins money..not a private cabal of banksters who are screwing the people…

      especially the”middle class”…focus the demands upon Congress,demand that they Honor their Oath to uphold the Constitution.

      A Constitutional Sheriff holds more authority than a Governor.
      We are AT the gates now,we can argue politics later the only issue now is will we reclaim our country…next step if we fail will be much much worse.

      Truth,Liberty,Justice…not party politics…

      Life,Liberty,Pursuit of Happiness.

      No more fibberty&just-this!

      • Kevin says:

        The power to control the currency should be in the congress and it should be completely transparent. The FED is responsible for the Dollar losing 96% of it’s value and all the bubbles since 1913. We need to get rid of the FED. They are still stealing money from the middle class by printing more money and keeping interest rates low. It’s the hidden tax of inflation that we pay as well. Why do we need them?

        We should at least throw the bums out that didn’t vote for the Bill to audit the FED (HR 1207). Then maybe they will get the message that we are dead serious about this. Ron Paul’s page has a list of congressmen who voted for and against it – Audit the Federal Reserve

        Another thing that we can do right now is stop using credit cards except when absolutely necessary. Cut off the money supply to the currupt banks who were rewarded with bail outs.

  6. lvent says:

    Go get ’em Bernie!!!!!

    • lvent says:

      THE TRUTH——–CHASE, MORGAN STANLEY AND WELLS FARGO RECEIVED TRILLIONS IN FED LOANS AT ZERO INTEREST AND IMAGINE THE TRILLIONS THEY GENERATED FOR THEMSELVES OFF OF THOSE ZERO INTEREST LOANS. NOW MILLIONS OF HOMEOWNERS KNOW THE TRUTH AND ALL THE LOANS SHOULD BE RESCINDED BECA– USE OF THEIR MORTGAGE FRAUD PONZI SCHEME. . MORGAN STANLEY HAD THE BIGGEST BALLS ON THE EFFING PLANET TO EVEN SUGGEST THAT THE U.S. IS MOVING TOWARD A HOME RENTERSHIP SOCIETY. F—THEM. RESCIND THE FRAUDULENT MORTGAGES AND PAY THE PEOPLE RESTITUTION AND GIVE BACK THE HOMES YOU HAVE ALREADY STOLEN FROM THE PEOPLE.

      • citizenaware says:

        absolutely….NOW would be PERFECT
        Love seen this come about, it has been tooooo long in the coming!
        can’t wait to see if this swept under the rug as so much is or if dealt with properly. Where is the crappy media all sheeple listen to if they know maybe we could make faster ground here if they got Pi$$ed.
        Thanks goodness we have 4closure to wake people up!!!!

      • Jeanette Ambrose says:

        Can I get a 2nd???!!!!

        Here here!!

      • lvent says:

        BLOOMBERG NEWS HAS BEEN RATTING ON THEM FOR MONTHS. THEY CAME OUT WITH ALL OF THIS STUFF MONTHS AGO. CNBC LEAKS A LITTLE SOMETIMES TOO. BLOOMBERG REALLY PUTS IT TO THEM. THEY REPORTED HOW THE FED GETS TRILLIONS OF DOLLARS IN MORTGAGE MONEY THAT THEY BUY TREASURIES WITH. CNBC REPORTED LAST FALL THAT WALL STREET MADE 60 TRILLION DOLLARS IN MORTGAGE DERIVATIVES IN 1999. PEOPLE DO NOT PAY ATTENTION.

    • Jeanette Ambrose says:

      Sic’em!!!

Leave a Reply

Your email address will not be published. Required fields are marked *