A New Role as 'Risk Regulator' Could Reshape Fed.

[elleng]

The Obama administration's plan to revamp regulation and prevent any more crashes like those that felled AIG and Lehman Brothers includes a bold new idea: Empower the Federal Reserve to oversee the biggest financial players whose failure could threaten other institutions and the economy.

But some lawmakers and economists say making the Fed a ''systemic risk regulator'' would itself be a high-stakes risk that would distract from its core mission: reviving the economy.

They say the Fed shares blame for the financial crisis that erupted last fall. Along with other regulators, it failed to crack down on risky mortgages and lax lending standards that ignited the crisis.

Unless the Fed improved its oversight abilities, ''giving the Fed more responsibility at this point is like a parent giving his son a bigger and faster car right after he crashed the family station wagon,'' said Mark Williams, professor of finance and economics at Boston University and a former Fed bank examiner.

http://nytimes.com/aponline/2009/06/16/business/AP-US-Fed-as-Supercop.html

[defendandprotect]

1. Fed should be put under control of Treasury . . and Obama should be able to

select new Chair.

[notesdev]

2. The Federal Reserve already had that power and misused it

... and along the way has done quite a number of completely, unambiguously illegal things (Maiden Lane I-III, acceptance of non-guaranteed debt as collateral, perjury in sworn testimony/ignoring a Congressional subpoena, etc.) in order to achieve its stated objectives.

The problem with the Federal Reserve is NOT a lack of power. It is a lack of honesty, transparency, loyalty, and simple competence.

In case anyone has forgotten just how incompetent (or alternatively, purposely misleading) Bernanke, Paulson, Geithner, & company are, here are some samples of Helicopter Ben's oracular wisdom:

March 2007 "At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency."

May 2007 "We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."

June 2007 "The troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system."

April 2008 "Clearly, the U.S. economy is going through a very difficult period. But among the great strengths of our economy is its ability to adapt and to respond to diverse challenges. Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year."


There are only two possible conclusions to an honest reading of the record:

1) Bernanke is staggeringly incompetent, to the point where his retention of his position has to be considered a national security risk;

2) Bernanke is deliberately lying and misleading the American public and our representatives, to the point where his retention of his position has to be considered a national security risk.

I think the guy is an out-and-out traitor; had I oversight of this situation he would be in handcuffs awaiting trial on capital (pun intended) crimes.