or subscribe to our
Twitter service


Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of ten of America's presidencies and who has edited alternative journals since 1964. The Review, which has been on the web since 1995, is now published from Freeport, Maine. We get over 5 million article visits a year. See for full contents of our site

August 21, 2009


One of the Obama administration's top priorities in its revamp is to regulate both derivatives and firms that trade them. But Gary Gensler, chairman of the Commodity Futures Trading Commission, warned key lawmakers in a letter this week that provisions of the administration's proposed legislation could leave significant elements of the derivatives market out of the reach of regulators and undermine efforts to combat fraud. . . Gensler helped craft an Obama administration plan to police this market for the first time. The proposal would require that most derivatives be traded on exchanges, like stocks and bonds, making the market much more transparent. It would also subject the banks and other firms that deal in the derivatives trade to robust requirements. However, the legislation contains several exceptions that are the source of Gensler's concern. For example, the administration has proposed exempting certain types of derivatives used to bet on currencies from regulation by the agency. The CFTC worries that traders could structure derivatives that would otherwise be regulated to fit within this exemption. . . A second concern is that minor traders in derivatives would not have to meet the robust trading requirements envisioned by the legislation. "This excludes a significant class of end users," the agency said. "This major exception may undermine the policy objective of lowering risk." Gensler said Wednesday that he still supports passage of the legislation. -Zachary A. Goldfarb, Washington Post

Dean Baker - The NYT reports that Fed Chairman Ben Bernanke seems to be cruising to reappointment in spite of having missed the largest financial bubble in the history of the world, giving us the worst downturn since the Great Depression. The article notes that there are also critics of the way that he has handled the bailout effort, but does not provide details. These details would be helpful to readers.

First, he misled Congress last fall to help gain quick approval of the TARP. He told Congress that the commercial paper market was shutting down, so that non-financial corporations could not raise the money needed to pay their bills and meet their payrolls. In fact, the Fed had the ability to prevent a shutdown of the commercial paper market by directly buying commercial paper. Bernanke announced plans to establish a special lending facility to buy commercial paper the weekend after Congress approved the TARP.

Bernanke has also chose to keep all of the Fed's lending secret. While anyone can go to the Treasury's website and find out which banks received money from the TARP and under what terms, Bernanke has refused to make information on Fed's lending available even to members of the relevant congressional oversight committees.

Finally, Bernanke has allowed the distinction between commercial and investment banking to be obliterated. After Goldman Sachs became a bank holding company, Bernanke has allowed it to continue to operate as an investment bank. This means that it has effectively gambled with the FDIC's insurance fund money. Even proponents of the repeal of Glass Steagall insisted that they would never allow this sort of mixture of government insured deposits and speculative investment banking.

For these reasons, even some people who don't think that Bernanke's responsibility for the greatest economic disaster in 70 years disqualifies him for reappointment do not want to see him get another term as Fed chair.

Mike Lux, Open Left - There is a solution to all the complaining by Congress over the Obama administration's plan to give more power to the Federal Reserve. It is a solution that solves the worries people have about giving a secretive, undemocratic institution that blew it in the run-up to this financial crisis more power. It is a solution that looks at least in part to have broad bipartisan support, if one bill with 238 co-sponsors in the House is any indication. It is a solution that Democrats ought to be excited about if they take all their historic statements about government transparency and more democracy seriously.

The only downside is that it would be picking a big policy fight that directly challenges the power of the too-big-to-fail banks.

The idea is simple, has been around for a long time, should have been done a long time ago: make the Fed a more open and democratic institution, rather than the secretive one tied so closely to the big banks it is supposed to be regulating. There are a variety of ideas in this area, some of my favorites being:

- The Federal Reserve Transparency Act, which now has 238 co-sponsors (weirdly a lot more Republicans than Democrats, but with 47 Democrats led by Alan Grayson). This bill gives GAO the authority to audit the Fed and report is findings to Congress.

Requiring the Fed to disclose which banks are receiving trillions of dollars to prop them up.

- Taking bankers off the governing board of the regional Feds, and making sure that only consumer, labor, and public interest representatives are on the governing boards (currently, banking industry representatives or those affiliated with the banking industry are allowed to have three out of nine seats board seats for each of the 12 Regional Feds). Having those kinds of reps placed inside the Federal Reserve is important as well.

- Making the Fed more transparent, and changing the governing structure so that more people than bankers are involved with it, would make it acceptable to progressives to give the Fed more power. Without that kind of restructuring, the issue will not go away, and will likely doom regulatory reform.

- Opening up the Fed should be one of the major things progressives demand before they support giving them any more power.

Washington Examiner - The Inspector General of the Federal Reserve in a video acknowledges that trillions of dollars cannot be accounted for. The astonishing five-minute clip is taken from a Congressional hearing where Federal Reserve Inspector General Elizabeth Coleman is questioned by Congressman Alan Grayson of Florida on May 6th about huge amounts of money for which the Federal Reserve is responsible.

The Inspector General avoids answering almost every question asked by the Congressman. In fact, she appears in this video clip to know less about the finances of the Federal Reserve than Congressman Grayson.

Among the many important questions raised, Grayson requests information on the Bloomberg report that many trillion of dollars in credit have been extended by the Federal Reserve. When the Inspector General avoids answering, Grayson states, "If you're not responsible for investigating that, who is?" Once again, she avoids the question stating, "We've not gotten to a specific level of detail to really be in a position to respond to your question."

At another point, Coleman answers a further question with, "We are not in a position to say whether there are losses." Yet if the Inspector General of the Federal Reserve cannot account for trillions of dollars extended, who can? Grayson holds his composure very well throughout the questioning. He concludes, "I have to tell you honestly, I am shocked to find out that nobody at the Federal Reserve, including the Inspector General, is keeping track of [the unaccounted for trillions]."



Anonymous Anonymous said...

Hi !.
You re, I guess , probably curious to know how one can collect a huge starting capital .
There is no need to invest much at first. You may begin to receive yields with as small sum of money as 20-100 dollars.

AimTrust is what you haven`t ever dreamt of such a chance to become rich
The firm incorporates an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.

It is based in Panama with offices everywhere: In USA, Canada, Cyprus.
Do you want to become an affluent person?
That`s your choice That`s what you desire!

I feel good, I started to take up real money with the help of this company,
and I invite you to do the same. If it gets down to select a proper companion who uses your money in a right way - that`s the AimTrust!.
I earn US$2,000 per day, and what I started with was a funny sum of 500 bucks!
It`s easy to join , just click this link
and go! Let`s take this option together to become rich

December 1, 2009 12:53 PM  
Anonymous Anonymous said...

I've already tried some applications but all of them need Itunes to be installed at least once, Since I don't have administrative privileges in my computer at work, I would like if there's an USB "portable" solution to temporary transfer my songs from/to my computer at work and my iphone without never have to install itunes whatsoever.

[url=]unlock iphone 3g[/url]

December 29, 2009 3:46 PM  
Anonymous Anonymous said...

This post has been removed by a blog administrator.

January 11, 2010 6:51 AM  

Post a Comment

<< Home