Three word answer: Politicians and Bureaucrats
On Aug 8, 7:46 pm, "\"Lone Wolf\"" <[email protected]> wrote: > Fed Chairman Bernanke signals more bank bailouts, calls for cuts in > social programs > By Barry Grey > 23 July 2009 > > In two days of testimony before Congress, Federal Reserve Board > Chairman Ben Bernanke defended the multi-trillion-dollar bailout of > the banks while seeking to allay fears on financial markets of a > potential eruption of inflation. > > Bernanke’s testimony before the House Financial Services Committee on > Tuesday and the Senate Banking Committee on Wednesday underscored the > commitment of both the central bank and the Obama administration to > defending the profits and wealth of the financial elite. His reception > by the Democratic-controlled committees made clear that, whatever > minor criticisms Congress may offer, it shares this overriding goal. > > Bernanke published a lengthy commentary in the Wall Street Journal on > Tuesday, timed to coincide with his appearance before the House > committee, arguing that the Fed had an “exit strategy” to unwind the > massive injections of capital into the banking system and avoid an > inflationary spiral once business activity begins to rebound from the > deepest recession since the 1930s. > > In his prepared statement, Bernanke cited the rally on Wall Street and > the renewed profitability of major banks as signs that the financial > crisis had abated. At the same time, he made clear that unemployment > and home foreclosures would continue to rise and remain at near-record > rates for at least the next two years, and warned that consumer > spending would remain depressed. > > The Fed chairman forecast a slight growth in the US economy by the end > of 2009 and a gradual acceleration in 2010 and 2011. But he said the > central bank, which cut its key interest rate to near zero last > December, would continue to hold interest rates at record lows “for an > extended period.” > > Bernanke acknowledged that “financial conditions remain stressed, and > many households and businesses are finding credit difficult to > obtain.” In response to a question about the prospects for a jobs > recovery, he said, “We have a very long haul here. Unemployment is > going to stay high for quite a while, and so it’s not going to feel > really like a strong economy.” > > However, he called a second economic stimulus package “premature” and > proposed no measures either to provide immediate relief for the > millions hit by plant closures, layoffs, and the collapse of home > values and savings, or to allocate government funds to create new > jobs. Nor did he propose any measures to compel the banks, which have > received more than $200 billion in taxpayer cash and trillions more in > low-interest loans, subsidies and government backing for their debt, > to increase their lending and make credit available to working > families. > > On the contrary, he reiterated earlier demands that Congress and the > Obama administration agree on plans to slash the budget deficit by > cutting basic social programs such as Medicare and Medicaid. In his > prepared statement, he said “...maintaining the confidence of the > public and financial markets requires that policymakers begin planning > now for the restoration of fiscal balance. Prompt attention to > questions of fiscal sustainability is particularly critical because of > the coming budgetary and economic challenges associated with the > retirement of the baby-boom generation and continued increases in the > costs of Medicare and Medicaid. Addressing the country’s fiscal > problems will require difficult choices, but postponing those choices > will only make them more difficult.” > > In the course of his testimony, he endorsed the drive by the Obama > administration, in the name of health care “reform,” to reduce the > costs to business and the government of health insurance for workers. > “I do believe,” he said, “for the broad economy’s health or fiscal > health, we do need to address the problem of increasing cost. And so > any program that is undertaken should look to how we’re going to get > control of costs...” > > An exchange on Wednesday with Jim Bunning, the right-wing Republican > senator from Kentucky, highlighted the priorities of the Federal > Reserve. Citing the role of former Fed Chairman Paul Volcker, who, > under presidents Jimmy Carter and Ronald Reagan, raised interest rates > above 20 percent and precipitated a wave of plant closures and > layoffs, Bunning asked, “But do you have the will as former Chairman > Volcker did to tighten even if the economy is still weak?” > > Bernanke replied, “We will absolutely do it, so long as we are not > forced to do something different by Congress.” > > At the same time, Bernanke made clear that the Fed would continue to > allocate whatever funds were needed to prop up the banks. In response > to the plea from Senate Banking Committee Chairman Christopher Dodd, > Democrat from Connecticut, Bernanke said he was prepared to extend one > bailout program, the Term Asset-Backed Securities Loan Facility > (TALF), beyond its December 31 expiration date. > > Much of the discussion at both hearings focused on fears of an > impending avalanche of commercial real estate defaults. Trends > Research Institute Director Gerald Celente, who forecast the subprime > mortgage crisis, has predicted that defaults will turn into a > commercial real estate collapse that will “dwarf the subprime > problem.” > > Moody’s Investor Services reported that the number of commercial > properties in default, foreclosure or bankruptcy in June was more than > twice the number six months earlier and almost twice the value. > > Bernanke at one point acknowledged that “Many banks will be facing > mountains of CRE (commercial real estate) challenges going forward.” > He told the Senate Banking Committee that it “may be appropriate” for > the government to guarantee commercial mortgages, an allocation of > government funds that could run into the hundreds of billions of > dollars. > > In a further indication of the character of the “recovery” touted by > Bernanke, the Fed chairman said, “The American consumer is not going > to be the source of a global boom by any means. On that very topic, we > are continuing to encourage our trading partners in Asia and elsewhere > to understand—and I believe that they do—that they need to substitute > their own domestic spending, their own domestic demand, for American > consumers as the engine of growth in their economies.” He cited > China’s stimulus program as a positive example. > > Bernanke used the hearings to oppose an Obama administration proposal > to establish, as part of a revised bank regulatory system, a largely > token consumer protection agency, a measure that is fiercely opposed > by Wall Street. He also denounced a pending bill in Congress that > would expand the powers of the Government Accountability Office, an > arm of Congress, to audit the Federal Reserve. > > The hearings, known as the semi-annual Monetary Policy Report to > Congress, came in the wake of bumper profit reports by bailed out > banks, most notably Goldman Sachs and JPMorgan Chase, and record set- > asides by Wall Street firms for executive salaries and bonuses. Public > anger is rising over the windfalls for bankers and big investors, some > of it coming from predatory hikes in credit card rates and fees and > huge penalties being charged for bank overdrafts. > > This sentiment found no genuine reflection in the hearings. > Massachusetts Democrat Barney Frank, the chairman of the House > Financial Services Committee, devoted his opening remarks to absolving > Bernanke of any wrongdoing in last year’s Bank of America takeover of > Merrill Lynch. > > A number of congressional hearings have been held into charges that > Bernanke and then-Treasury Secretary Henry Paulson pressured Bank of > America CEO Kenneth Lewis to go through with the takeover even though > it had become clear that Merrill’s debts and toxic assets were far > higher than the failing bank had acknowledged. Shareholders have filed > suits alleging that Lewis, under pressure from Bernanke and Paulson, > concealed the real state of Merrill from shareholders and the public. > > Within weeks of the January 2009 completion of the merger, the > government awarded Bank of America $20 billion in bailout cash under > the Troubled Asset Relief Program (TARP) over and above the $25 > billion that had been given the bank in October of 2008. The > government also agreed to guarantee over $300 billion on Bank of > America assets. > > Frank declared that he saw “no villains” in the takeover deal. > > On the Senate side, Chairman Dodd used his opening statement to > posture as an advocate for laid off workers and families facing > foreclosure, praising the progress in stabilizing the banks but > complaining that the recovery was one-sided. There should be more > balance, he said, so that the “other half”—namely, the broad mass of > the American people—also benefitted. > > He took pains, however, to combine this criticism with a testimonial > to Bernanke’s service to the country. “Mr. Chairman,” he said, “all of > us understand the importance of the work you are doing—and that’s not > just a platitude or a generous comment. And we all look forward to > continuing to partner with you in this effort.” > > No one at either hearing raised the charges leveled Monday by the > special inspector general for TARP, Neil Barofsky, that TARP funds > were being misused by the banks. Nor did any congressman or senator > cite his denunciation of the Obama administration for refusing to > compel the banks to reveal how the bailout funds are being used. In > his report, Barofsky estimated the total in government funds allocated > for the various bailout programs at $23.7 trillion. > > Only imbeciles label the handing out of tax payer's funds as > government handouts. The money belongs to the people, not the > government. The government lives on handouts from the workers, not > vice-a-versa --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
