Home > Uncategorized > JP Morgan Chase may have stolen from California electricity users

JP Morgan Chase may have stolen from California electricity users

Remember when bank robbery meant someone was robbing the bank?  These days, it generally means the banksters are robbing the public.

Theft o’ the day? A JP Morgan subsidiary is being investigated for gaming the California electricity market, Enron-style.  Here, America’s media watchdogs point out (back in early July) that getting caught stealing can be bad publicity: http://www.bloomberg.com/news/2012-07-03/jpmorgan-probed-over-potential-power-market-manipulation-1-.html  Listen to Bloomberg news quoting someone expressing concern:

“He’s got a PR nightmare in front of him,” said Paul Miller, a former examiner for the Federal Reserve Bank of Philadelphiaand analyst at FBR Capital Markets in Arlington, Virginia. “It’s another headline risk, which means more regulators, which means over-regulation, which will eventually hit their bottom line.”

See, this is how “over-regulation” happens.  First you steal, then you hide, then you get caught, and then those accursed regulators over regulate.  Before you know it, it’s harder to make money by stealing.

More at the Sacramento Bee today: http://www.sacbee.com/2012/07/30/4672960/electricity-trading-probed.html

A view with more respect for the abilities of Wall Street comes from Kevin Drum at Mother Jones: http://www.motherjones.com/kevin-drum/2012/07/gaming-electricity-markets-wall-street-style.  After explaining JP Morgan Chase’s clever approach towards stealing from California ratepayers, Drum concludes:

Hooray for Wall Street! When it comes to clever financial manipulation with no socially redeeming value, nobody does it better. It’s nice to know that America is still #1 in something.

  1. July 30, 2012 at 9:28 am

    Just do away with all regulation and consumer protection, it will all be okay, right?

  2. Capt. Renault
    July 30, 2012 at 9:42 am

    I’m shocked, shocked I tell you!!!!

  3. July 30, 2012 at 10:32 am

    Good show on Democracy Now about this kind of stuff. What’s really going on behind the pretense.

  4. July 30, 2012 at 11:22 am

    Once again California must deal with grand theft of its treasury. Before Enron, California had a surplus budget and then after Enron, California had massive debts which led to Gray Davis being recalled. Arnold Schwarzenegger did not fix anything because price fixing was something beyond the Governor’s control. Bush gave Enron the green light to manipulate electricity futures.


  5. Just Watchin
    July 30, 2012 at 4:50 pm

    Blaming California`s financial problems on Enron is beyond belief. And it wouldn`t be complete without including Bush.

  6. July 30, 2012 at 5:04 pm

    Just the facts. http://en.wikipedia.org/wiki/California_electricity_crisis

    You can spin it any way you like.

  7. Walt
    July 30, 2012 at 5:12 pm

    Which is why the banks are sitting on all our bailout money. . .keeping the economy down until Romney is elected. Then and only then will the money will start to flow.

  8. Just Watchin
    July 30, 2012 at 5:16 pm

    According to the wikipedia article, rates went up 800% from April 2000 to December 2000. Who was President during that time?

  9. textwrapper
    July 30, 2012 at 5:18 pm

    Blaming California`s financial problems on Enron is beyond belief. And it wouldn`t be complete without including Bush.

    The states that are having the most serious financial difficulties are the ones that have Teabaggers in charge.
    And yes, by all means, Bush is still a douche.

  10. Plain Jane
    July 30, 2012 at 6:51 pm

    JW thinks the president has authority over state energy regulatons? He completely ignored the section entitled “New Regulations” which states that in the mid 90’s Governor Pete Wilson (R) changed the electricity industry and forced investor owned utilities (like PG&E) to sell a significant portion of their energy generation systems to the unregulated and privately owned market (Enron) who then manipulated the market.

  11. Thorstein Veblen
    July 30, 2012 at 9:26 pm

    Gotta love the free market. If only we could unfetter it even more………….

  12. 713
    July 30, 2012 at 9:43 pm

    By all means, don’t wait for the investigation to be complete. Accusations are good enough.

  13. High Finance
    July 30, 2012 at 9:49 pm

    Everything bad is George Bush’s fault. Everything good is Obama’s credit.

    You people drink the Dem party’s kool aid.

  14. Sonia Baur
    July 30, 2012 at 10:32 pm

    Thank you intrepid reporter! I get the general gestalt (and the resulting bill), but it’s nice that someone is teasing out the details.

  15. July 30, 2012 at 10:42 pm

    HiFi drinks whatever Bush is serving.

  16. Just Watchin
    July 31, 2012 at 6:07 am

    PJ…… quite the contrary. It’s just that Assa Kavich included Bush in his “blame game”, and Bush wasn’t even in office. Besides, I’d think even you would agree that California’s current financial problems are a result of more than energy pricing.

  17. Mitch
    July 31, 2012 at 6:40 am

    By all means, don’t wait for the investigation to be complete. Accusations are good enough.

    Unfortunately, for many of us it now seems a borderline miracle when even mere accusations reach the public. Those of us who feel this way might suspect that “waiting for the investigation to be complete,” where big money is involved, might mean waiting for godot. The Herald does not have criminal enforcement powers, so I don’t think it needs to use “beyond a reasonable doubt” as a standard.

    Keep in mind that a 97% consensus that we are frying our home is deemed an incomplete investigation by those profiting from the cooking.

  18. Plain Jane
    July 31, 2012 at 7:56 am

    There’s one fewer scientist on the “skeptic” side now, Mitch. And quite a prominent one at that.


  19. Mitch
    July 31, 2012 at 8:27 am

    Yes, PJ. It’s not everyday that someone funded by Koch Industries jumps ship.

    The true believers are already claiming this proves Koch’s support of research is honest.

    Koch got what he paid for: a few more years of delay. The consensus for human-caused global warming is now 97.16% of “scientists” instead of 97.15%, but the remaining denialists are already talking about the BEST study’s flaws.

    Meanwhile, of the political leaders of the large and powerful nations, the number that show any evidence of understanding the magnitude of the problem remains at zero. They were all taught an excellent lesson by what the wealthiest did to gore Gore.

  20. Plain Jane
    July 31, 2012 at 8:37 am

    Was Bush not in office when VP Cheney held his secret energy meetings, including Enron executives, the records of which are still protected by Cheney’s “executive privilege,” JW? Was it not Cheney who was told of Enron’s market manipulation (as well as others) by members of his task force and chose to keep it secret? Was Bush not in office when ABC reported this, “As California continues to endure an unprecedented energy crisis, with its rolling blackouts and record-high electric bills, President Bush has put the largest and most electorally valuable state in the nation on notice: You’re on your own.”????

  21. Plain Jane
    July 31, 2012 at 8:52 am

    Did you read the whole article Fred? It concludes with “As usual, you have to look carefully at this. Curry strongly disagreed with the conclusions of the paper, and needs to be taken seriously: she is, after all, a co-author of the previous studies. Her point is simply that:

    (1) the paper does say there has been warming, but well, everyone knew that. The question is the magnitude of the warming, the part of that which is anthropogenic, i.e., human-caused, and then what part of that part is caused by CO2. They have done a lot to clean up the data set, but as Watts et. al. note, that dataset may be subject to a systematic error.

    (2) the strength of the conclusion that essentially all of that is both anthropogenic and caused by CO2 is being overstated.”

    Suddenly “everyone knew” there has been warming? Suddenly all they need to know now is how much is human-caused and how much of the human-caused is due to CO2? Since the only possible CO2 reductions are those which are man-caused and we know that the current level is at least in part causing rising global temperatures, wouldn’t it be prudent to reduce as much carbon emission as possible now while we continue to research the other possible contributors?

  22. Percy
    July 31, 2012 at 9:52 am

    “Wouldn’t it be prudent to reduce as much carbon emission as possible now while we continue to research the other possible contributors?” Of course not PJ, that would involve doing something that makes logical sense. Don’t you know that science can’t be trusted and we need to believe in god and the free market.

  23. Thorstein Veblen
    July 31, 2012 at 9:59 am

    Well, Muller also believes that one of the best ways to deal with co2 emissions is to cut coal and petrol while dramatically increasing ‘safe’ fracking to get at the cleaner-burning natural gas deposits. Wonder if the Koch Bros. have any interest in fracking for natural gas?

    Tells me that perhaps even the hydrocarbon robber barons can see the handwriting on the wall, although they haven’t told Fox News or Fred Mangels yet. Maybe even they don’t wish to pass on a planet in turmoil to their grandkids. So, they admit its not a hoax, and then figure out how best to make even more money in a non-hoax world.

    Little interest in truly renewable, clean sources of energy. Conservation is given lip service. At least no serious push for nuclear anymore. But, no discussion of changes to lifestyles, while lifestyles will surely change nevertheless.

    I expect a lot more of the climate-change deniers will be converting now that the hydrocarbon robber barons have given blessing. So, that is a positive, I suppose.

  24. Just Watchin
    July 31, 2012 at 10:05 am

    PJ….you’re only hearing what you want to hear. I was responding to the Wikipedia entry that Assa posted. You might want to read it and it’s time references before you get you grannypanties in a bunch.
    And does this mean that you also blame all of California’s financial woes on energy pricing? If so, stick your head back in the sand, or other body part, and wait for the state to follow it’s cities into bankruptcy.

  25. Plain Jane
    July 31, 2012 at 10:22 am

    No JW, I also blame Republican sponsored propositions which, even if they had good intentions, have hobbled our communities and state with super majority requirements to raise taxes in order to pay for basic necessities like education.

  26. not a fan
    July 31, 2012 at 10:43 am

    Same old yada-yada PJ. Its all the republican propositions. Even though the left has controlled this state for 20 years. I believe its depends that are in a bunch, you are way past grannypants.

  27. Plain Jane
    July 31, 2012 at 10:48 am

    Do you not know the difference between a majority and a super majority, NAF? “Control” implies enough votes to do what they want and that obviously isn’t true. A majority which can’t pass their legislation without a super majority are only in control in your delusional world.

  28. Just Watchin
    July 31, 2012 at 11:44 am

    Let’s see PJ…..y’all voted to allow a state budget to be passed with a simple majority. How has that worked out for you?

  29. Just Middle Finance
    July 31, 2012 at 12:11 pm

    The Financial Meltdown / Mortgage Crisis happened under Bush’s Presidency. Enron and Big Oil overcharged America and California for energy and manipulated prices. So what? It was all completely legal thanks to our man Cheney helping write the laws. Everything the Banks, Big Oil, Bain & Co., and JP Morgan did was legal and profitable. Start buying their stock and you too will get a piece of the action.

  30. not a man
    July 31, 2012 at 12:13 pm

    ya, PJ, u are so stoopid. granny pantz, lol

  31. Plain Jane
    July 31, 2012 at 12:20 pm

    It really hurt my feelings too. NAM. The ability to pass a budget is pretty meaningless if the till is empty before the basic necessities are paid for and you don’t have the ability to put more money in the till.

  32. Little Man
    July 31, 2012 at 5:27 pm

    It used to be rare that the Angstas (MSM) let us little people see what the Bankstas are up to in this ongoing class war. And this doesn’t even talk about the biggest parasite on the common weal, the FED.

  33. High Finance
    July 31, 2012 at 7:28 pm

    Factless & PJ, you are paranoid delusional conspiracy nuts.

    The first step to recovery is for you to accept & acknowledge that fact.

  34. Plain Jane
    July 31, 2012 at 7:42 pm

    Brilliant come back, HiFi.

  35. Robespierre
    July 31, 2012 at 8:23 pm

    Yeah, how about we audit the FED? Then we burn them at the stake.

  36. Little Man
    August 1, 2012 at 7:16 am

    The audit the Fed bill passed the House, 97 out of the 98 against the audit were Dems. The GAO determined the FED was fudging its figure release throught the MSM. Think the Senate will allow an audit? Bwa ha ha! WTFudge…. I think a van of Blackwater goons just came up my drive…. this is my last—–

  37. Plain Jane
    August 1, 2012 at 7:45 am

    When did the GAO report that the Fed was fudging its numbers LM? The Fed is audited every year by both an outside, independent auditing firm and the GAO. The only thing the Ron Paul audit will do is politicize their decision making process, which the GOP has been trying to do for years. There’s no doubt in my mind that this attack on the Fed is because the GOP wants the Fed to do nothing to help the economy for their political benefit.

  38. August 1, 2012 at 11:34 am

    This is the tried’n’true method of republicans for decades. Nixon stalled the Paris peace talks til after the election. Reagan committed treason by making a deal with the Ayatollah Khomeni (?) to not release the hostages until after the election. The ruling class has no allegiance to America. Hell, they’re doing more for China these days than they are for the US. If only the electorate could see these traitors for what they are. I don’t think Obama is any better.
    It’ll take a global disaster of gigantic proportions to undue the authority of this government.

  39. Little Man
    August 1, 2012 at 11:46 am

    You like Forbes, right? “The Feds $16 Trillion Bailouts Undereported”.

  40. Plain Jane
    August 1, 2012 at 12:02 pm

    You should read the comments from readers, as well as the comments in response by the author of that contribution, LM. The claim that “this was the first ever audit of the fed” is clearly false and reveals the author’s ignorance. Her opinion is based on easily demonstrable falsehoods no matter which source she got to post it.

  41. Plain Jane
    August 1, 2012 at 12:05 pm
  42. Little Man
    August 1, 2012 at 12:06 pm

    Or this. “When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

    Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.”

  43. Plain Jane
    August 1, 2012 at 12:18 pm

    So what do you see as an alternative to the fed, LM? Congress manipulating the economy for political gain?

  44. Plain Jane
    August 1, 2012 at 12:19 pm

    Why would anyone who understands that congress belongs to their fat cat contributors want to put them in charge of monetary policy?

  45. Plain Jane
  46. Smart 5th Grader
    August 1, 2012 at 12:34 pm

    Or Health Care ? (Just asking. I know the Insurance companies are a giant scam to skim half the health money away from Doctors and Nurses into CEO pockets, but still, those 98% Lawyer-Politicians on the Hill?)

  47. Little Man
    August 1, 2012 at 6:58 pm

    PJ… I don’t think there is any political solution that would not be to the benefit of the fat cats… period. It a belief formed over six decades of observing government. The FED is very much a group of fat cats and I would like to do away with the institution altogether and go back to whatever existed before Congress voted it in on Christmas eve…in a rushed process much like the Patraiteract. I believe the FED is a very evil institution, and if Kucinich and Barney and Paul are for this bill, so am I. I just trust their judgement on the matter more than yours. And I certainly value your right to a different opinion. As you probably know, President Wilson expressed a great deal of regret that he had signed the Federal Reserve Act:
    “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”

  48. Little Man
    August 1, 2012 at 7:10 pm

    There seems to be a debate over the authenticity of this quote….. so let me substitute these verified quotes from Wilson’s The New Freedom: A Call for the Emancipation of the Generous Energies of a People (New York and Garden City: Doubleday, Page & Company, 1913) :
    “A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men … [W]e have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.”.
    .. and “Since I entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.”

  49. another little man
    August 1, 2012 at 7:16 pm

    The book is online.

  50. Plain Jane
    August 1, 2012 at 7:26 pm

    What we had before the Federal Reserve Act was constant economic crises.

  51. 1st Little Man
    August 1, 2012 at 8:42 pm

    PJ I don’t really have enough economic smarts to continue this… these are just the thoughts and beliefs and opinions on a topic I have no expertise, and little comprehension. I really don’t know the economic history of our country in the times preceding the FRA. There may have been economic crises as severe as the ’30’s and current depression which have been on the Fed watch. From the little I have read the FED was an early Bangsta “solution”.
    So don’t weight my opinion too much, even I am not certain of its merit beyond my own belief system. And I am sure more opining than stating. I will certainly read and respect your comments if you care to respond, but I am going to quit the topic.

  52. Thorstein Veblen
    August 1, 2012 at 9:31 pm

    We’ve been struggling for over 200 years to find a monetary system that works for all of us. Actually, its been over 2000 years if you consider the moneychangers at the temple.

    We did ok when banks were limited to operate only within one state. We did ok when commercial banks were separate from investment banks. In fact, while highly imperfect, the FED still worked ok for 75 +/- years, because its members were regulated and their activities limited. When unleashed by Reagan/Bush/Clinton to fulfill their wet-dreams of pornographic profits, well, you see the result. Moneychangers never change.

  53. High Finance
    August 1, 2012 at 9:41 pm

    “Smart” Fifth grader should check his “facts” about the number of Lawyers in Congress.

    Your facts are wrong again.

  54. tra
    August 1, 2012 at 10:07 pm

    P.J. said: “What we had before the Federal Reserve Act was constant economic crises.”

    No, what we had before the Federal Reserve Act was periodic economic crises. And what we’ve had since the Federal Reserve Act has been…more periodic economic crises. These have included the Great Depression (which the Fed may have worsened) and our recent (current?) Great Recession. The effect of Federal Reserve’s policies on this recent recession, and the ongoing slump we are continuing to experience, will no doubt be an item for future economists and historians to debate.

    Personally I don’t think the Fed is the root of all our problems, it’s just one more institution that may help in some ways, and hurt in others. I’ll readily admit that I don’t know enough about the subject to venture an opinion on whether it does more good or more harm, or what kind of reforms or alternatives might be an improvement. But as far as I’m concerned the more thorough the audit, the better. Given how much power has been invested in this unelected body, at the very least we should have full transparency, because without that, any decisions on how the Fed should be reformed (or, for the sake of argument, whether it should be replaced, and if so, with what) are going to be based on incomplete information.

  55. Anonymous
    August 2, 2012 at 6:46 am
  56. Walt
    August 2, 2012 at 7:11 am

    “I don’t really have enough economic smarts to continue this… these are just the thoughts and beliefs and opinions on a topic I have no expertise, and little comprehension.”

    None of us do, and that’s a big part of the problem. With the advent of MERS, FRB, securitization, Fox News. Citizens United and deregulated banks it’s a whole new world, and knowing history won’t help much in predicting what will happen. It’s not just the Fed, or lawyers, or even politicians, it’s US who are to blame. From the growers using other people’s property to make easy money to meth dealers and thieves to CEOs and corporate raiders and people militarized by advertising disinformation, it’s “I’m taking what I want and to hell with you.”

  57. somebody
    August 2, 2012 at 8:28 am

    Perhaps the motto on the dollar bill ought to be changed to “How much can I get away with”.

  58. August 2, 2012 at 10:07 am

    Plain Jane :
    When did the GAO report that the Fed was fudging its numbers LM? The Fed is audited every year by both an outside, independent auditing firm and the GAO. The only thing the Ron Paul audit will do is politicize their decision making process, which the GOP has been trying to do for years. There’s no doubt in my mind that this attack on the Fed is because the GOP wants the Fed to do nothing to help the economy for their political benefit.

    This is a common and complete misapprehension. The Fed is not under the jurisdiction of Congress, let alone the GAO. It is not audited at all, let alone annually. Ron Paul’s one-shot fluke was of course due to global meltdown shock, and its findings were not widely publicized, because they were so genuinely appalling. My favorite fact from it was that on the very day in 2007 or 8 when the House of Representatives voted overwhelmingly against shoveling the banks $770 million (they were repremanded by their masters and reversed their vote a week later) the Fed release almost $8 trillion, I said trillion, dollars to the same interests, which incidentally own the fed, and manage the selection of its board.

    It’s really worth understanding that those $8 trillion not only never appeared on Fed books–they didn’t even appear on the bank books that received them! Every too-big-to-fail bank keeps double books, if it books magic money from Uncle Bernanke at all. Go to Bernie Sanders’ website for complete information on how many hundreds of millions of dollars each of our biggest banks lied about receiving from the Fed. Start with Chase–it received ten times more money than Jamie Dimon acknowledged reluctantly taking.

    The bottom-line puzzle key is this: every dollar the Fed creates is a dollar of debt, not credit. We choose to build our monetary creation around driving debt deeper. You can’t have a bubble without a cratering class getting fleeced. It doesn’t have to be this way–but it does.

  59. Plain Jane
    August 2, 2012 at 10:16 am

    “t is not audited at all, let alone annually”


  60. August 2, 2012 at 10:39 am

    Those are “internal audits,” Jane. No one outside sees them, if they exist at all (just like our own Code Enforcement Oversight Committee minutes!). They are “subject to review” by GAO, but were actually reviewed only once in history, thanks to an unprecedented vote of Congress not about to be repeated, which demonstrated that Bernanke’s public declarations about Quantitative Easing had not even a ten percent relation to reality, and shrinking. Also, the vast majority of his bank subsidies come in the form of open drawing rights, at no interest, with no terms for repayment. Those unlimited credit windows are still open today. How do you audit a stolen credit card that you can’t cancel? Answer: over and over again, every day. Which Congress isn’t about to do, now that they have a glimmer of how ugly it is in there.

  61. Plain Jane
    August 2, 2012 at 10:46 am
  62. August 2, 2012 at 11:09 am

    Those are “performance audits,” Jane. They aren’t audits. Terms of art are in this case terms of swindle. For example, from Bernie’s website: “Sanders introduced legislation to audit the Fed and legislation to identify banks and other financial institutions that received trillions of dollars in taxpayer-backed loans and other financial assistance during the financial crisis. During a March 2009 hearing, Sanders asked Fed Chairman Bernanke to name the hundreds of banks that received these secret loans but Bernanke refused to name any of the financial institutions.”

    But weren’t they all audited? Every year? No. They’re lying to you, Jane. I’ll see if I can dig up a Matt Taibbi summary of the real deal for you.

  63. August 2, 2012 at 11:12 am

    Here’s Taibbi’s first overview. Note the date in mid-April, you can find news accounts in other websites summing up the ‘jaw-dropping’ information. I’ll look some more.


  64. August 2, 2012 at 11:17 am

    “The audit of the Fed was undertaken because Bernie and a few other members of congress fought very hard during the Dodd-Frank regulatory reform debate to force open Ben Bernanke’s books, and as a result we now know the staggering details of the secret bailout era. We know that Citigroup received $1.6 trillion in loans, and Morgan Stanley $2 trillion, and Goldman Sachs – the same Goldman Sachs that bragged about how quickly it paid back its $10 billion TARP bailout – over $600 billion. We know that hedge fund billionaires who moved their corporate addresses to the Cayman Islands to avoid U.S. taxes were rewarded by their buddies in government with huge Fed loans;”

    Read more: http://www.rollingstone.com/politics/news/bernie-sanders-puts-barack-obama-to-shame-20101215#ixzz22PjIfwlR

    I’ll find a more general article.

  65. Jack Sherman
    August 2, 2012 at 11:18 am

    You would think that people would be outraged by their own ignorance and demand a newspaper that would bother to explain (yet another) massive theft of public wealth….or what happened in 2008….while tens of millions of working families continue to lose life’s only capital…their homes.

    In order to be believed, the truth must be repeated.

  66. August 2, 2012 at 11:32 am

    Here’s Forbes saying what I’ve said:


    Here’s how Sanders’ office summed up the one-time audit:


    I’m still looking for bazillions given to individual banksters, but note in Bernie’s summary that “the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president,” Sanders said.

    Also, “The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts.”

  67. August 2, 2012 at 11:47 am

    At the end of this column are the wads given to the biggest banks. They are more than ten times what each reported receiving, or being bullied into taking:


    Jack, you are so right. News that happens once, no matter how shocking, might as well never have happened at all. But all this info is still out there to be reeled in.

  68. What Now
    August 2, 2012 at 11:59 am

    Thanks for the posts, Longwind.
    Great job getting this thread back on track.

  69. Plain Jane
    August 2, 2012 at 1:34 pm

    Looks like the “Federal Reserve has never been audited” is the Big Lie du jour.

    As to the Forbes contribution, see my post on the same link way above. Even the author has admitted she was wrong. Read the comments.

  70. tra
    August 2, 2012 at 4:10 pm


    What if the argument were presented in less absolutist terms, such as “The Federal Reserve can and should be independently audited more thoroughly, more inclusively, and more often than it has been in the past?” Would you disagree with that?

    Are you sure you’re not just having a bit of a knee-jerk reaction to the fact that “Audit the Fed” has become a rallying cry for Ron Paul fans? While Paul is an ideologue (and IMHO a bit of a kook), and although he advocates for what I believe are some really wrong-headed ideas (opposition to civil rights laws, opposition to Social Security, Medicare, etc,.) that doesn’t mean that he’s necessarily wrong on every point. Nor does the fact that some of his supporters overstate their case necessarily mean that there is no case to be made.

    What I find interesting about Ron Paul is the surprising number of places where his views turn out to intersect so closely with those of progressive folks like Bernie Sanders — including on some very important issues (such as military spending, “preventive” invasions, torture, the Patriot Act, immigrant rights, civil liberties, the War on Drugs, etc.).

    This issue over transparency at the Fed seems to be another case where the progressive left and the libertarian right may both (for different reasons) have identified something worth examining, something which the mainstream is not inclined to examine.

    Given that on pretty much every issue in which Paul’s views intersect with Sanders’ views, I agree wholeheartedly with both of them, this arouses my curiosity as to whether the same may turn out to be true on issues related to the Fed.

  71. tra
    August 2, 2012 at 4:25 pm

    In other words, while it’s true that even a blind pig can find acorns, and even a stopped clock is right twice a day, when the pig keeps finding such large acorns and every time he does the clock is showing the right time, I sit up and start paying attention.

  72. tra
    August 2, 2012 at 4:33 pm


    Would you agree that the actions of the Fed have played a very important role in promoting the “too big to fail” banking/financial system that has caused such havoc, and that the lack of transparency (with the facts about the full size and details of their bailout of banks and other institutions not becoming public for years after the fact, and only after a great struggle) tends to protect and perpetuate that system?

  73. Thorstein Veblen
    August 2, 2012 at 8:23 pm

    I’m not pj, but I am impressed by the length of that sentence. And I believe that the grammer works too. Well done.

  74. tborstein veblen
    August 2, 2012 at 9:35 pm

    Oh, and by the way, the fed has adopted an inflation target of 2% annually. Keep that in mind if unemployment falls and wages start to rise.

  75. Plain Jane
    August 3, 2012 at 7:11 am

    I think the Federal Reserve should be reformed, but the purpose of these attacks from the right is to politicize the fed and block them from taking any substantive actions to stimulate the economy which is seen as helping Obama, and from the left the opposite reason. As I have proven time and again, the fed’s finances are audited every year by an independent auditing firm as well as the GAO, neither are in-house audits. That politicians want to politicize the fed so they can use it to advance their side’s agenda isn’t surprising. They want to be control the fed by parsing and spinning out of context quotes from policy discussions which are currently shielded from political (and big business) exploitation. The fed’s admission that the economy is slowing, unemployment is too high and inflation lower than target, yet they refused to take any action. The vote in the House to audit the thread was a message to the fed and played a role, no doubt, in their vote to postpone any stimulative action until at least September. That is why our country’s economy shouldn’t be controlled entirely by politicians. As to the make-up of the fed, if not from banks, where would you find the people with experience and knowledge of the intricacies of national and international banking?

    Tra, it isn’t so much “too big to fail” as it is “too interconnected to fail.” Letting one big bank (or a bunch of small ones) collapse has a domino effect on the entire industry and the global economy. It’s not the fed that created the conditions for the 2008 banking crisis, but congress who gutted regulations, unfunded regulators and pumped up the bubble with tax cuts on the credit card.

  76. Plain Jane
    August 3, 2012 at 7:14 am

    Forgive the typos please. Early morning after a very late night.

  77. August 3, 2012 at 8:00 am

    I’m so disillusioned. Our very own Plain Jane is a tool of the magic-moneyed plutocrats, gushing conspiracy theories and unable to understand the propaganda qualifiers used in her own false proofs: “Internal audits,” are not audits (If they’re internal they’re not even pretending to be), “performance audits,” are not audits, they’re staff reports, “subject to review” by GAO means not reviewed by GAO without specific request from Congress, which has happened once in history over yelps of protest that help assure it won’t happen again. The Fed is our manufactory of debt, Jane. It’s where immiseration meets opportunity. It is the Rosetta Stone of economic enslavement, and has been recognized as such from the first days of our country, when by other central-bank names it was fought over, killed and resuscitated for more than a century. It was a left-wing issue until Woodie Wilson pried the stake from its heart.

    The principle effect of giving plutocrats control of money creation is that they create it for themselves. All that self-interested capital stabilizes markets until they are massively destabilized: the Fed’s 20th Century history is pocked with infrequent, generation-long depressions instead the the 19th Century’s frequent short-term panics.

    I don’t mean to make this personal or silly. To me the most salient fact of our discussion yesterday is that no one knew there had in fact been one recent, spectacular audit of the Fed, which revealed a cash conveyor belt of uncountable trillions running at will into the bank maws you defend, Jane, from right-wing conspiracies. Sorry, the Fed *is* a right-wing conspiracy. Check out http://www.webofdebt.com/

    It’s written by http://www.ellenbrown.com/ , she’s a great synthesizer of information and no kind of nut.

  78. Plain Jane
    August 3, 2012 at 8:16 am

    Longwind, I said SPECIFICALLY that neither the independent audit nor the GAO audit are internal audits and they are done every year. That last year’s GAO audit was the first “top to bottom audit by the GAO” is not the same thing as claiming the GAO has never audited the fed. The fed was created to be a nonpolitical economy stabilizer. I agree that they probably have too power, but giving congress a whip to use on them is not the answer. I don’t really know what is. No matter which side of the aisle you favor, you shouldn’t want congress to be given more power to thwart the steps needed to prevent or avert economic catastrophe for their political gain and their contributors profit.

  79. tborstein veblen
    August 3, 2012 at 9:16 am

    Nailed it, longwind.

  80. August 3, 2012 at 9:40 am

    Thanks, thorsten and What Now.

    Sure Jane, let’s have a specific monetary policy that teaches the middle class, whose affluence is the bedrock of our society, to give up on savings and die in debt, with gigantic credit craters around the homes that they thought were investments, not rigged roulette wheels run by criminal cartels too big to indict. And let’s refuse to understand that every penny of that consumer debt is profit to the too-big-to-failures that own the Fed, and set Fed policies, and buy the assets of each country whose economies they destroy at deep discounts, while impoverishing local investors. Just like home!

    I would just as soon be clubbed by Congress as by the Fed, the IMF and the World Bank. At least Congress panders to me. Bernanke, in case you haven’t registered his principle occupation, panders to Wall Street. No one would invest in it otherwise. Who do you think should ‘reform’ the system that exists to concentrate wealth? I have two better ideas. Let’s understand the Fed first, and get rid of it second.

  81. Plain Jane
    August 3, 2012 at 9:47 am

    Good luck with your plan for economic anarchy, Longwind.

  82. August 3, 2012 at 9:55 am

    Yup, the American 19th Century, “the Great Barbeque” of untrammelled economic development unseen on earth before and seldom since, with no Fed function of any kind overseeing it after Andrew Jackson repeatedly clubbed its infernal hydra heads dead dead dead, sure proves . . . that we should read some history.

    It was Ben Franklin who first threatened the Bank of England in colonial days by explaining that state scrip representing credit, not debt, was equally valuable money, which made whole communities richer, not poorer. Suddenly, Ben Franklin wasn’t a Serious Person in the City. But he understood economics.

  83. tra
    August 3, 2012 at 10:57 am

    “That is why our country’s economy shouldn’t be controlled entirely by politicians.”

    It’s funny how people always use the words “politicians” and “controlled” when arguing that a particular function of society should be controlled by private interests, rather than the government, but use the terms “elected officials” and “regulated” when making the opposite argument.

  84. tra
    August 3, 2012 at 11:22 am

    P.J., it appears that you agree that the Fed has too much power, although, like myself, you’re not sure what should be done about it.

    Seems to me that having a “top to bottom” audit of the Fed was a very important step, since if you don’t have a full picture of what an institution is doing, it would be impossible to know what type of reforms would be appropriate.

    So, whatever their motivations, it seems to me that we owe thanks to those who have pushed to “audit the Fed.”

    As far as the idea that the recent GAO audit is the reason why the Fed isn’t doing more to stimulate the economy, I’m not sure I buy that. My guess is that they aren’t doing more because the interests they represent already got what they wanted, and they are far more concerned with preventing “wage inflation” (oh the horrors!) than they are with stimulating growth.

  85. August 3, 2012 at 11:28 am

    Speaking of multi-trillion-dollar scandals you’ve hardly heard of, heeere’s . . . LIBOR!


    If you depend on tv news, God help you. No one else will. The reporter doesn’t point out what What Now did, that reading about LIBOR once in the paper really won’t help you understand it ever again.

  86. Plain Jane
    August 3, 2012 at 11:28 am

    But I didn’t say that either, Tra. Not wanting politicians to control the economy doesn’t mean I want private interests to control the economy. Legislative control of government spending with the nonpartisan fed in charge of maintaining a healthy economy without regard to political winds. It’s funny how people who use terms like “always” often do so to build their strawman.

  87. Plain Jane
    August 3, 2012 at 11:33 am

    Do you really want a Federal Reserve controlled by people who are still selling trickle down and starve the beast or think there is inconclusive evidence of climate change?

  88. Anonymous
    August 3, 2012 at 12:09 pm

    Sorry, P.J., I guess I should have use the word “often” instead of the word “always.” I just find it interesting how people (myself included!) often choose to use the term “politicians” when they are arguing against more government involvement in a particular activity, as opposed to the term “elected officials” when arguing for it.

    I assume that this is because the term “politician” tends to evoke associations with corruption, dishonesty, cronyinsm, etc., whereas the term “elected officials” is a bit more neutral, and contains a reminder that elected officials are (at least in theory!) accountable to the voters.

  89. Plain Jane
    August 3, 2012 at 12:16 pm

    I mean “politician” in its most pejorative definition, Tra. “Elected official” is neutral.

  90. Anonymous
    August 3, 2012 at 12:16 pm

    “Do you really want a Federal Reserve controlled by people who are still selling trickle down and starve the beast…”

    Isn’t that what we have now?

  91. tra
    August 3, 2012 at 12:18 pm

    Oops, those last two comment were from me.

  92. tra
    August 3, 2012 at 12:20 pm

    “I mean “politician” in its most pejorative definition, Tra. ‘Elected official’ is neutral.”

    Yes, that was exactly my point.

  93. Plain Jane
    August 3, 2012 at 12:53 pm

    I think “elected officials” who deliberately block economic recovery for political gain are “politicians” of the worst sort. Blocking Obama’s nomination for director of Fannie and Freddie to keep a Bush hold-over (DeMarco) in charge to block refinancing and reduction of mortgages which, aside from lightening the burden of millions of working class families, would increase the disposable income of people who would spend it and create more jobs.
    Instead, the “politicians” want to cut taxes for the very richest and raise taxes by cutting middle class deductions – an increase of about $2000 a year for the middle class.

  94. tra
    August 3, 2012 at 2:20 pm

    I agree with all that, P.J., and I understand the appeal of “insulating” the Fed from the influence of politics.

    I guess it all comes down to whether you think the Fed’s actions, and the way it operates, have been mostly helpful to our economic well-being (however you define that), or pretty much neutral, or mostly harmful, and if so, how much.

    If you think the Fed, as it is currently structured, is mostly helpful, or at least not very harmful, then obviously there’s little incentive to risk a worse outcome by making fundamental changes, including changes that might make it more accountable to elected officials (which could be good or bad, depending on who’s in power).

    My main concern is that it seems like the Fed’s ability to carry out their massive bail-out of “too big to fail” banking and financial institutions in secrecy prevented the public from seeing the full extent of the dysfunctionality of our financial system. For example, if people had known just how far the Fed had to go to pull these institutions back from the brink of bankruptcy, it might have increased public pressure for stronger regulations aimed at preventing the need for a similar bail-out in the future. In other words, it seems like the Fed has been providing “cover” for Wall Street, allowing the financial powers-that-be to argue that things weren’t bad enough to justify major changes in banking and financial services regulations were justified.

    In other words, I agree that it’s the responsibility of Congress to create effective regulations for our banking and financial sector, but my concern is that the Fed’s concealment of the full extent of it’s bailouts may have substantially undermined efforts to do so.

    Given the amount of power wielded by the Federal Reserve, power that has been granted to this institution by Congress, it seems to me that a periodic “full, top-to-bottom” GAO audit of the Fed is a very reasonable demand. In fact, I think it’s disturbing that we would even need to “demand” that. It should be a given.

  95. August 3, 2012 at 2:24 pm

    Yes, by all means worry about Bush’s appointee still in office–Jane, didn’t you see that the worst Bush financial overlords were the ones promoted by Obama? At least this one doesn’t run the SEC yet. Do you really think the two parties have different policies toward Wall Street, which finances them both?

    The Fed is called nonpartisan, as you do, so no sniveling politician will dare to interfere in the owners of banks naming the banking system’s directors. They are partisans not of donkeys or of elephants, but of the rich. The bogeyman you brandish, Jane, of us idiots who don’t even understand how the Fed manufactures our debts one day up and eating the rich and voting ourselves richer, while people deprived of jobs vote for the people who deprive them, is worthy of a Teabagger. But not of you, Jane.

  96. tra
    August 3, 2012 at 2:34 pm

    As far as those who are convinced that the best course of action would be to “abolish the Fed,” I guess what I want to know is where you would rather see control of monetary policy reside?

    Should those who set monetary policy be elected directly by the voters?
    Should they be appointed by Congress? Should the U.S. Treasury take on some or all of the responsibilities currently under the purview of the Fed — putting those powers under the direct control of the Executive Branch? In other words, should the President have the title “Banker in Chief” added to his job description? Or should the government get out of the banking business altogether, leaving it up to the private banks to sort things out on their own?

    I’m not intending to be snarky, I am just not clear on what the proposed alternatives are. So I’m inviting you to inform and (maybe) persuade me.

  97. What Now
    August 3, 2012 at 4:08 pm

    From TRA:
    “…if people had known just how far the Fed had to go to pull these institutions back from the brink of bankruptcy, it might have increased public pressure for stronger regulations aimed at preventing the need for a similar bail-out in the future. In other words, it seems like the Fed has been providing “cover” for Wall Street, allowing the financial powers-that-be to argue that things weren’t bad enough to justify major changes in banking and financial services regulations were justified.”

    EXCELLENT point, TRA.
    And given the worldwide economic turmoil, there’s very good reason to believe we are currently in a minor lull between hurricanes.
    Both branches of The Wall Street Party hace been pretty well consumed with perpetrating this fraud on behalf of their campaign contributors and lobbyists.
    Mammon reigns supreme and people are just another marketable commodity and abstract variable.

  98. The Dork Avenger
    August 3, 2012 at 7:29 pm

    And why isn’t there asset forfeiture for white collar crimes?

  99. Thorstein Veblen
    August 3, 2012 at 9:47 pm

    Ok, at the birth of the FED, what the US Govt said was ; “ok, we’ll let you bankers manage the nations money supply, just keep inflation in check and keep people employed”. What the bankers heard was ; ‘ok, we’ll let you bankers manage the nations money supply’.

    Two things to keep in mind. First, banks make money by lending, primarily, so it should be no surprise that we are collectively in severe debt. Second, if the FED has to choose between low inflation/high unemployment or higher inflation/lower unemployment, which do they choose? Charged with keeping both inflation and unemployment low, but they make money on the one combo and not the other.

    And, finally, protecting the FED from Congress is kinda like protecting Hitler from the Nazi’s. I mean, really, who do you think controls who?

  100. August 6, 2012 at 9:38 am

    Fact is that those in the upper echelons of government do not have the interests of the public in mind. Any department they are involved in is corrupted and criminalized beyond all recognition. We cannot trust them to run the Federal Reserve anymore than we can trust them to run the Post Office. They are thieves and liars. They are looting the treasury. They are the world’s criminal and they have besmirched the honor or our country, and have made vain the deaths of all those who died protecting the world from the last incarnation of fascist-corporate criminals.

  101. Anonymous
    August 6, 2012 at 3:39 pm

    This is just a begining of JP Morgan saga.They are habitually witholding funds (fancy word for stealing) through EBT benefits.They cheat and steal from disabled and elderly.Their apparently have contract with US Government for funds beloning to the recipients of benefits,
    giving them a licence to steal.Shame ,Shame ,Shame.Exploatation of eledrly and disabled is
    a criminal offence,but JP MORGAN is expert of robbing and stealing and getting away with it.

  102. Maggie Fleetfoot
    August 7, 2012 at 9:23 am

    Steal a little, and they throw you in jail.
    Steal a lot, and they make you the head of JP Morgan.

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