Thursday, February 2, 2017

With Donald Trump now in Office, Congress finally gets the courage to put the fear of God into the Fed, and Chairman Yellen

There is an interesting dichotomy that is now occurring since the Republican Party took over control of both houses of Congress, and the office of the President... and that is a new focus on the Federal Reserve and the illegal activities they have been allowed to conduct for eight years under Barack Obama.

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A number of years ago when Ben Bernanke was still the Chairman of the Fed, Democratic Senator Chuck Schumer gave the central bank carte blanche to do anything they saw fit to try to fix the economy.  And this distribution of both monetary and fiscal policies that were the responsibility of the Congress assured that the Fed would never have any real oversight to do as they saw fit... including the re-distribution of the wealth of the Middle Class into the hands of the 1%.

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It appears that Democrats may be taking a more aggressive stand in urging the Fed to do more easing. 
After 5-minute discussion of the economy, and the ongoing disappointing recovery, Chuck Schumer ended his query of Ben Bernanke at the Senate today with this memorable exchange. 
His conclusion: “Get to work, Mr. Chairman.” — CNBC
But this has all changed now that Donald Trump has taken over the White House, and it appears his willingness to call out the Fed, Chairman Yellen, and even Vice-Chairman Stanley Fischer is leading other Republicans to man up and publicly put the central bank on notice that their days of non-transparent oversight may be over.
In what may be a harbinger of major headaches to come for the Fed, a recent letter (Jan. 31) penned by Republican representative  Patrick McHenry, Vice Chairman of the Financial Services Committee, has lashed out at Janet Yellen, telling the Fed chair in no uncertain terms that "despite the clear message delivered by President Donald Trump in prioritizing America's interest in international negotiations, it appears that the Federal Reserve continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands without transparency, accountability, or the authority to do so." 
His assessment of this ongoing activity by the Fed: "This is unacceptable."
McHenry's emphasis is on "international forums" such as the Financial Stability Board, the Basel Committee on Banking and Supervision, and the International Association of Insurance Supervisors, and he notes that "continued participation" in these forums must be "predicated on achieving objectives set by the new Administration", something which will "likely require a comprehensive review of past agreements that unfairly penalized the American financial system in areas as varied as bank capital, insurance, derivatives, systemic risk, and asset management." 
He then adds that "the secretive structures of these international forums must also be reevaluated" because when the deals were negotiated, "international standards were turned into domestic regulations that forced American firms of various sizes to substantially raise their capital requirements, leading to slower economic growth here in America." 
Here one may recall how the Fed secretly provided tens of billions in under the table "rescue loans" to foreign banks doing business in the US (and others) during the peak days of the 2008 financial crisis. 
His conclusion, however, is what must worry the Fed the most, because  as McHenry notes, "it is incumbent upon all regulators to support the U.S. economy, and scrutinize international agreements that are killing American jobs. Accordingly, the Federal Reserve must cease all attempts to negotiate binding standards burdening American business until President Trump has had an opportunity to nominate and appoint officials that prioritize America's best interests." 
The implication: the current Fed officials do not prioritze America's best interests, and are therefore expendable. - Zerohedge
As the MAGA movement begins to invade all aspects of the government and society, those who are now on board the Trump Train to try to Make America Great Again are realizing that the biggest swamp that needs to be drained is located just down the road on Eccles Street.

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