PoliticalAction.com Blog

January 25, 2010

Dear Pennsylvania Subscriber,

After a full year of rope-a-done and refusing to have his Federal Reserve audited, Ben Bernanke is on the ropes and could be knocked out for re-nomination.

Campaign for Liberty activists are in the lead insisting “No Audit, No Bernanke.” Please immediately call Senator Bob Casey and Senator Arlen Specter at the numbers below and tell them (again, if you’ve already called) “No Audit, No Bernanke.”

Here’s what’s going on:

Campaign for Liberty launced a nationwide fight against a bailout for Bernanke last week. Now we are following it up with phones, email and banner ads targeting over a dozen swing-vote senators.

The Senate is boiling over with outrage about the Fed’s abuse of the TARP program, bailouts, and money supply, as well as its refusal to submit to a full and complete audit.

Now is the time to deal the knockout blow!

Please call your senators at the numbers below and join in the fight:

Senator Bob Casey: 202-224-6324
Senator Arlen Specter: 202-224-4254

Tell them that Ben Bernanke must not be confirmed without an up or down roll call vote for Audit the Fed on the Senate floor.

This fight is really coming to a head, and the decision could will likely come in the next few days. Please call now.

In liberty,

John Tate

P.S. Thanks to the efforts of patriots like you, Ben Bernanke’s days of secrecy at the Federal Reserve may be numbered!

That’s because his confirmation is being held up until the Senate votes on Audit the Fed. Please call your senators at the numbers above and tell them plain and simple: “No Audit, No Bernanke.”

Jim Rogers is well spoken and right on again….”Ben Bernanke has
never been right on anything” Whew!

Amidst the voter anger at Wall Street and Washington, D.C., ABC News has learned that the Senate Democratic leadership isn’t sure there are enough votes to re-confirm Ben Bernanke for another term as chairman of the Federal Reserve.

Bernanke’s term expires on Jan. 31.

The White House did not respond to many requests for comment.

“The American people are disgusted with the greed and recklessness of Wall Street,” Sen. Bernie Sanders, I-Vt., said in an interview with The Associated Press last month. “People are asking, ‘Why didn’t the Fed intervene at the appropriate time to stop the casino-type activities of large financial companies?'”

Sanders, Sen. Jim Bunning, R-Ky., Sen. Jim DeMint, R-S.C., and Sen. David Vitter, R-La., have all put holds on Bernanke’s nomination, requiring 60 votes to proceed to a vote.

More….

High-stakes duel between Rep. Paul and chairman Bernanke intensifies

By Silla Brush | The Hill
12/08/09

Rep. Ron Paul and Ben Bernanke are locked in a clash of titans.

Paul, the 74-year-old House libertarian from Texas with the high-pitched voice, has fought for decades to kill off the Federal Reserve.

Bernanke, the mild-mannered ex-Princeton professor and chairman of the bank, is waging a high-stakes battle for the Fed’s reputation. And he’s doing everything possible to knock out Paul.

The fight is still in the early rounds. But with the full House expected to vote this week to give government auditors more power to scrutinize the Fed, Paul has the upper hand.

The Senate is a much more difficult round for Paul, though a similar stew of liberal and conservative support is starting to simmer in the upper chamber behind the Republican’s wonky auditing measure.

Bernanke and Paul have never met one-on-one behind closed doors, Paul’s office said. The battle has taken place in public — on blogs, with grassroots activists and during congressional hearings.

Bernanke has testified against the provision, given lengthy media interviews, written op-eds and attempted to lift the cloud of secrecy that hangs over the bank.

The Fed is audited, he argues, but allowing government scrutiny of interest rate decisions will politicize the Fed. Opening the door to congressionally requested audits would compromise the market’s confidence in the bank.

Paul, a longstanding supporter of a new gold standard, made his case formally in his recently published book, End the Fed.

The 2008 presidential candidate’s crusade is no longer a quixotic quest. He is a prime beneficiary of the grassroots anger this year against government bailouts for Wall Street.

First introduced in February, Paul’s bill to audit the Fed has gained 317 co-sponsors, a shocking three-quarters of the House. The bill has not won over many Democrats in leadership, but it has picked up several committee chairmen, including Reps. Bart Gordon (Tenn.), Jim Oberstar (Minn.) and John Spratt (S.C.).

Rep. Alan Grayson (D-Fla.), a prominent Paul ally on the bill, has provided a huge boost to the effort with his firebrand strain of liberal politics.
Grayson has publicly slammed the Fed, going so far as calling its top lobbyist a “K Street whore” before apologizing. Paul himself said the full force of “lobbyists for the Fed” is stacked against him.

As the popularity of the Paul-Grayson measure rose this year, Bernanke’s fell.

Praised by many economists for taking the necessary steps to right the economy over the last year, his overall public approval has soured. A Rasmussen poll in November showed that just 21 percent of those surveyed thought Bernanke should be reappointed. Meanwhile, 79 percent of those polled said auditing the Fed is a good idea.

Republicans have jumped behind Paul, who stood out in last year’s GOP presidential primary for his outspokenness against the Iraq war.

“There needs to be Fed independence and accountability for those dollars to at least look back at those decisions,” said Rep. Kevin Brady (R-Texas).

But the political value is plain as Republicans argue the government is taking too large a role in the economy.

“The Fed becomes for Republicans a very convenient, always controversial, always misunderstood, very specific whipping boy that they can ride to potential victory in 2010 and 2012,” said a Washington-based financial lobbyist.

Bernanke has the normally powerful Rep. Barney Frank (D-Mass.) in his corner. But as chairman of the House Financial Services Committee, Frank couldn’t eke out a compromise.

Frank rarely loses battles, but an attempt — with Rep. Mel Watt (D-N.C.) — at a deal on the audit issue simply fell short at the committee level. Liberal activist Robert Borosage, who is campaigning against Bernanke’s nomination for a second term, said the compromise effort was nothing more than “the establishment alternative.”

The committee voted 43-26 in favor of Paul’s amendment as 15 Democrats on the panel bucked Frank.

The vote drew a bright line between the senior Democrats atop the committee and the freshman and sophomore members.

“I think some of the newer members are in the most vulnerable districts,” said Rep. Brad Miller (D-N.C.), a Paul-Grayson co-sponsor who instead joined Frank in voting against the Paul amendment. “They were certainly getting the calls that I was getting, and they were reading the politics differently.”

Frank and Paul are both veterans of the House, and while they are on nearly opposite ends of the political spectrum, they have a mutual respect. The two have worked closely on an Internet gaming measure.

Many Democrats and Republicans on Capitol Hill say that Frank, despite his partisan rhetoric, is a pragmatist.

“I never felt [Frank] was against me,” Paul said.

Frank said last week the language wouldn’t be changed when the House heads for the vote. Ten of the 13 House members on the Rules Committee are among Paul’s backers, including Chairwoman Louise Slaughter (D-N.Y.).

“Absent some change in the way the public is reacting, I don’t see any changes,” Frank said. “I think there is this tension within the Republican Party. A lot of their people who traditionally have a lot of influence are troubled by this, but they may be cowed by the anger at the Fed.”

In the Senate, Paul has found support from Sens. Jim DeMint, the conservative Republican from South Carolina, and Bernie Sanders, the Independent from Vermont who calls himself a proud socialist.

A left-right coalition of interest groups on the outside is joining forces against Bernanke.

Bob Cusack contributed to this article.

Ron Paul on the House floor 12/01/09:
“This belief is a dream that will become a nightmare for all Americans!”

Run Ron, Run!

By Anne Flaherty, Associated Press Writer

WASHINGTON – The Federal Reserve threatened to force the ouster of Bank of America CEO Kenneth Lewis if he didn’t follow through with plans to buy Merrill Lynch & Co., Republicans said Wednesday after reviewing internal documents.

Republicans also said there was evidence that the government tried to restrict information related to the merger from being publicly released.

However, none of the documents showed that the government explicitly instructed Bank of America to hide Merrill Lynch’s losses from shareholders, they said.

The House Oversight and Government Reform Committee is investigating claims that top government officials, including then-Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, urged Lewis to go through with the acquisition and not disclose to shareholders the details of Merrill Lynch’s deteriorating financial state.

Lewis was scheduled to testify on Thursday before the panel, which is chaired by Rep. Edolphus Towns, D-N.Y.

Bank of America has received $45 billion from the government’s $700 billion Troubled Asset Relief Program. As part of that money, the bank received $20 billion in January after Lewis requested it to help offset mounting losses at Merrill Lynch.

According to an internal memo prepared by the committee’s Republican staff, Paulson and Bernanke “put a gun to the head” of Lewis and Bank of America’s board of directors to force the merger even though Lewis “felt it was his duty to his shareholders to try his luck in the legal system and back out of the deal.”

As proof, Republicans cite several documents including an e-mail by an employee at the Richmond Federal Reserve who said Bernake had made it clear that if Bank of America backed out and needed financial assistance, “management is gone.”

Just a few weeks after the deal was completed, Bank of America’s fourth-quarter earnings report showed the hit its balance sheet took on the Merrill Lynch transaction, making Lewis the target of shareholder anger.

In January, Bank of America reported a $2.39 billion fourth-quarter loss and Merrill Lynch disclosed a loss of more than $15 billion.

By: CNBC.com | 10 Jun 2009 | 09:55 AM ET

The Federal Reserve’s balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit, Jim Grant, editor of Grant’s Interest Rate Observer, told CNBC.

With $45 billion in capital and $2.1 trillion in assets, the central bank would not withstand the scrutiny normally afforded other institutions, Grant said in a live interview.

“If the Fed examiners were set upon the Fed’s own documents—unlabeled documents—to pass judgment on the Fed’s capacity to survive the difficulties it faces in credit, it would shut this institution down,” he said. “The Fed is undercapitalized in a way that Citicorp is undercapitalized.”

Grant said he would support legislation currently making its way through Congress calling for an audit of the Fed.

Moreover, he criticized the way the Fed has managed the financial crisis, saying the central bank’s target rate should not be around zero.

“I think zero is the wrong rate for almost any economy,” Grant said, adding the Fed has “embarked on a vast experiment in moral hazard. Interest rates are the traffic signals in a market economy, and everything’s green. … You have to wonder whether these interest rates are the right clearing rate or rather they are the imposition of a central bank.”

Amid a disparity between analysts predicting there will be no rate hikes soon and the fed funds futures indicating tightening by the end of the year, Grant said he thinks the Fed indeed will begin raising rates as inflation creeps into the picture.

Fed funds futures have fully priced in as much as a half-point rise in the target rate from its current range of zero to 0.25 percent.

“If the hairs on the back of your neck stand up when there’s too much unanimity of opinion, then one begins to worry about this,” he said. “The Fed proverbially has been late.”