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Crime is Only Legal If You’re a Politician

There is no “rule of law” in America anymore. There is only RULE.  We go to jail for what is PERFECTLY LEGAL for congress and the president to do.  WHY is it “legal” for them to do what we are forbidden to do?  BECAUSE THEY MAKE THE RULES, AND ARE ACCOUNTABLE TO NO ONE.  It’s not just democrats or republicans.  It’s ALL of them.

Look at all the politicians who went to Washington as financial nobodies, but who are now worth millions and millions of dollars.  Harry Reid, John Boehner, and Nancy Pelosi come immediately to mind.  Are you going to try to tell me they got that rich that fast on their congressional salary alone?  If so, you’re a special kind of stupid.  They have made it perfectly legal for themselves to do “insider trading.”  They buy and sell stocks based completely on the knowledge of laws that they themselves write, knowing how it will help or harm an industry or company.  Remember Martha Stewart?  She WENT TO JAIL for trading some stocks because she had word of what was going to happen to it.

Do you think perhaps we should let Martha Stewart lead the pitchfork brigade that storms Washington DC to burn it down?

In Gutting The STOCK Act, Congress Plays By Its Own Rules

By Sakib Ahmed on April 26th, 2013

The STOCK Act, a law that was designed to stop insider trading among government officials, was gutted last week when a key part of the law was repealed unanimously by Congress and signed by President Barack Obama. But if anything, it’s more of a surprise that Congress passed the law with such a wide margin in the first place given its ubiquity in Washington.

In an investigation a year and half ago, 60 Minutes uncovered evidence of several instances of insider trading among prominent government officials. The trades, while technically legal can hardly be considered ethical. One of these trades involved Alabama Representative Spencer Bachus, then the ranking Republican member on the House Financial Services Committee back in September 2008. Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke were holding closed door briefings with congressional leaders, and privately warning them that a global financial meltdown could occur within a few days. Continue reading


Fix income inequality with $10 million loans for everyone!

Former FDIC Chairman Sheila Bair, using my style of sarcasm, really lays it on Mr. Bernanke and the Obama administrations fiscal policies.  A very entertaining and educational article, assuming you are not one easily distracted by sarcasm.

Fix income inequality with $10 million loans for everyone!

By Sheila Bair, Published: April 13

Are you concerned about growing income inequality in America? Are you resentful of all that wealth concentrated in the 1 percent? I’ve got the perfect solution, a modest proposal that involves just a small adjustment in the Federal Reserve’s easy monetary policy. Best of all, it will mean that none of us have to work for a living anymore.

Continue reading

Schizophrenic Bernanke Trying to Save His Legacy

Isn’t it funny, in a Greek tragic comedy sort of way, how incompetent people in positions of power whose ideology and methodology fails utterly and completely can never seem to own up to their failures, or at least just fade away and let the process of cleaning up their mess get underway?

Such is the case with Fed Chairman Ben Bernanke, or Bernyankme if you prefer. Bernanke and all of the other liberal progressives keep trumpeting that things would have been much worse if we hadn’t spent hundreds of billions, and now trillions of dollars that we didn’t have, don’t have, and will never have. Yet they make these assertions with no real data to back them up. Just ‘feelings.’

In the first article below, Bernyankme is running around trying to salvage is legacy and convince everyone what a great job he did by spending trillions and monetizing our debt, but when confronted by a college student for concrete proof and even methodology behind his decision making on the bailouts, he can’t answer the questions. Then, in the 2nd article below, he says/admits that continuing the course that he played a major part in putting us on will lead us to total economic collapse a whole lot sooner than anyone is letting on. That’s the first really honest and competent thing I’ve ever heard him say.

I’ve said it before, and now even the Fed Chair agrees with me, we hurtling headlong into a repeat of the Weimar Republic economically, and socially if we do not RADICALLY and DRASTICALLY change course NOW. Not in 5 years, not in 10 years. We don’t have that long. If Washington doesn’t stop the deficit spending NOW, put us on a course to begin paying down our debt, get out of the way and let our economy take off, most of America has not the foggiest idea how bad things are going to get.

MCKINLEY AND FITTON: Bernanke’s fairy tale recession story for kids

Records show Fed had no coherent strategy for bank bailouts

By Vern McKinley and Tom Fitton | Wednesday, April 11, 2012

It’s an oldie but a goodie for our Federal Reserve chairman. In one of his recent lectures at George Washington University (GWU), Ben S. Bernanke made the self-congratulatory assertion that the “forceful policy response” led by the Federal Reserve in 2008 helped avoid a more serious economic downturn.

Continue reading

US economy has never been on the road to recovery, says Paul Krugman

In cases like this, I normally just smile smugly and go on about my business. However, in this case I’ll indulge myself and say those 4 little words that I usually leave unspoken.



US economy has never been on the road to recovery, says Paul Krugman

5 Aug, 2011, 01.35PM IST, Paul Krugman,New York Times

In case you had any doubts, Thursday’s more than 500-point plunge in the Dow Jones industrial average and the drop in interest rates to near-record lows confirmed it: The economy isn’t recovering, and Washington has been worrying about the wrong things.

It’s not just that the threat of a double-dip recession has become very real. It’s now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery.

Continue reading

Barack Minderbender and Company Keep Catch-22 Alive and Well

This is an excellent article describing the corner that the current administration has finally painted us into. The author does a nice job of describing the parallels between the principle of Catch-22 and things happening in the administration now.  Regardless of what the democrats or republicans do at this point, we are in for hard times.  It’s just a matter of how long the hard times last and what the country will look like on the other side of the coming fire storm.

Choose wisely, America.


US Economy in Its Own Catch-22

By Jim Quinn Jan 03, 2011 12:50 pm

For example, the economy needs to improve in order to generate jobs, but the economy can only improve if people have jobs.

As I began to think about what might happen in 2011, the classic Joseph Heller novel Catch-22 kept entering my mind. Am I sane for thinking such a thing, or am I so insane that asking this question proves that I’m too rational to even think such a thing? In the novel, the “Catch-22” is that “anyone who wants to get out of combat duty isn’t really crazy.” Hence, pilots who request a fitness evaluation are sane, and therefore must fly in combat. At the same time, if an evaluation is not requested by the pilot, he will never receive one (i.e. they can never be found “insane”), meaning he must also fly in combat. Therefore, Catch-22 ensures that no pilot can ever be grounded for being insane — even if he were. The absurdity is captured in this passage:

There was only one catch and that was Catch-22, which specified that a concern for one’s own safety in the face of dangers that were real and immediate was the process of a rational mind. Orr was crazy and could be grounded. All he had to do was ask; and as soon as he did, he would no longer be crazy and would have to fly more missions. Orr would be crazy to fly more missions and sane if he didn’t, but if he was sane, he had to fly them. If he flew them, he was crazy and didn’t have to; but if he didn’t want to, he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle. “That’s some catch, that Catch-22,” he observed. “It’s the best there is,” Doc Daneeka agreed.

The United States and its leaders are stuck in their own Catch-22. They need the economy to improve in order to generate jobs, but the economy can only improve if people have jobs. They need the economy to recover in order to improve our deficit situation, but if the economy really recovers, long-term interest rates will increase, further depressing the housing market and increasing the interest expense burden for the US, therefore increasing the deficit. A recovering economy would result in more production and consumption, which would result in more oil consumption, driving the price above $100 per barrel, therefore depressing the economy. Americans must save for their retirements as 10,000 baby boomers turn 65 every day, but if the savings rate goes back to 10%, the economy will collapse due to lack of consumption. Consumer expenditures account for 71% of GDP and need to revert back to 65% for the US to have a balanced sustainable economy, but a reduction in consumer spending will push the US back into recession, reducing tax revenues and increasing deficits. You can see why Catch-22 is the theme for 2011.

It seems the consensus for 2011 is that the economy will grow 3% to 4%, 2 million new jobs will be created, corporate profits will rise, and the stock market will rise another 10% to 15%. Sounds pretty good. The problem with this storyline is that it’s based on a 2010 that gave the appearance of recovery, but was a hoax propped up by trillions in borrowed funds. On January 1, 2010, the National Debt of the United States rested at $12.3 trillion. On December 31, 2010, the National Debt checked in at $13.9 trillion, an increase of $1.6 trillion.

The Federal Reserve Balance Sheet totaled $2.28 trillion on January 1, 2010. Today, it stands at $2.46 trillion, an increase of $180 billion.

Over this same time frame, the Real GDP of the US has increased about $350 billion, and is still below the level reached in the fourth quarter of 2007. US politicians and Ben Bernanke spent almost $1.8 trillion, or 13% of GDP, in one year to create a miniscule 2.7% increase in GDP. This is reported as a recovery by the mainstream media. On September 18, 2008, the American financial system came within hours of a total meltdown. The National Debt on that day stood at $9.7 trillion. The US Government has borrowed $4.2 trillion since that date, a 43% increase in the National Debt in 27 months. The Federal Reserve balance sheet totaled $963 billion in September 2008 and Bernanke has expanded it by $1.5 trillion, a 155% increase in 27 months. Most of the increase was due to the purchase of toxic mortgage-backed securities from their Wall Street masters.

Real GDP in the third quarter of 2008 was $13.2 trillion. Real GDP in the third quarter of 2010 was $13.3 trillion.

Think about these facts for one minute. Leaders have borrowed $5.7 trillion from future generations and have increased GDP by $100 billion. The financial crisis, caused by excessive debt creation by Wall Street and ridiculously low interest rates set by the Federal Reserve, 30 years in the making, erupted in 2008. The response to a crisis caused by too much debt and interest rates manipulated too low was to create an immense amount of additional debt and reduce interest rates to zero. The patient has terminal cancer and the doctors have injected the patient with more cancer cells and a massive dose of morphine. The knowledge about how we achieved the 2010 “recovery” is essential to understanding what could happen in 2011.

Confidence Game

Ben Bernanke, Timothy Geithner, Barack Obama, the Wall Street banks, and the corporate mainstream media are playing a giant confidence game. It’s a desperate gamble. The plan has been to convince the population of the US that the economy is in full recovery mode. By convincing the masses that things are recovering, they will begin to spend and buy stocks. If they spend, companies will gain confidence and start hiring workers. More jobs will create increasing confidence, reinforcing the recovery story, and leading to the stock market soaring to new heights. As the market rises, the average Joe will be drawn into the market and it will go higher. Tax revenues will rise as corporate profits, wages, and capital gains increase. This will reduce the deficit. This is the plan and it appears to be working so far. But, Catch-22 will kick in during 2011.

Retail sales are up 6.5% over 2009 as consumers have been convinced to whip out one of their 15 credit cards and buy some more iPads (AAPL), flat screen TVs, Ugg boots, and Tiffany (TIF) diamond pendants. Consumer non-revolving debt for autos, student loans, boats, and mobile homes is at an all-time high as the government-run financing arms of GMAC and Sallie Mae have issued loans to almost anyone. Total consumer credit card debt has been flat for 2010 as banks have written it off as fast as consumers can charge it. The savings rate has begun to fall again as Americans are being convinced to live today and not worry about tomorrow. Of course, the current savings rate of 5.9% would be 2% if the government wasn’t dishing out billions in transfer payments. Wages have declined by $127 billion from the third quarter of 2008, while government transfer payments for unemployment and other social programs have increased by $441 billion, all borrowed.

Politicians and bureaucrats promise to cut unsustainable spending as soon as the economy recovers. The economy has been recovering for the last six quarters, according to GDP figures, but there are absolutely no government efforts to cut spending. It will never be the right time to cut spending. Another faux crisis will be used as a reason to continue unfunded spending increases. Having consumer spending account for 70% of GDP is unbalanced and unsustainable. Everyone knows that consumer spending needs to revert back to 65% of GDP and the Savings Rate needs to rise to 8% or higher in order to ensure the long-term fiscal health of the country. Savings and investment are what sustain countries over time. Borrowing and spending is a recipe for failure and bankruptcy. The facts are that consumer expenditures as a percentage of GDP have actually risen since 2007 and Congress and Obama just cut payroll taxes in an effort to encourage Americans to spend even more borrowed money. Catch-22 is alive and well.

The first half of 2011 is guaranteed to give the appearance of recovery. The lame-duck Congress “compromise” will pump hundreds of billions of borrowed dollars into the economy. The continuation of unemployment benefits for 99 weeks (supposedly to help employment) and the 2% payroll tax cut will goose consumer spending. Ben Bernanke and his QE2 stimulus for Wall Street bankers is pumping $75 billion per month ($3 billion to $4 billion per day) directly into the stock market. Since Bernanke gave Wall Street the all-clear signal in late August, the Nasdaq has soared 25%. Despite the fact that there are 362,000 less Americans employed than were employed in August 2010, the mainstream media will continue to tout the jobs recovery. The goal of all these efforts is to boost confidence and spending. Everything being done by those in power has the seeds of its own destruction built in. The Catch-22 will assert itself in the second half of 2011.

Housing Catch-22

Ben Bernanke, an Ivy League PhD who should understand the concept of standard deviation, missed a 3-standard deviation bubble in housing, as ironically pointed out by a recent Dallas Federal Reserve report.

Home prices still need to fall 23%, just to revert to the long-term mean. A new perfect storm is brewing for housing in 2011 and will not subside until late 2012. You may have thought those bad mortgages had all been written off. You would be wrong. There will be in excess of $200 billion of adjustable-rate mortgages that reset between 2011 and 2012, with in excess of $125 billion being the dreaded Alt-A mortgages. This is a recipe for millions of new foreclosures.

According to the Dallas Fed, in addition to the 3.9 million homes on the market, there is a shadow inventory of 6 million homes that will be coming on the market due to foreclosure. About 3.6 million housing units, representing 2.7% of the total housing stock, are vacant and being held off the market. These are not occasional-use homes visited by people whose usual residence is elsewhere but units that are vacant year-round. Presumably, many are among the 6 million distressed properties that are listed as at least 60 days delinquent, in foreclosure or foreclosed in banks’ inventories.

The coup de grace for the housing market will be Ben Bernake’s ode to Catch-22. In his November 4 op-ed piece he had this to say about his $600 billion QE2:

Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance.

On the day Bernanke wrote this, 30-Year Mortgage Rates were 4.2%. Today, two months later, they stand at 5.0%. This should be a real boon to refinancing and the avalanche of mortgage resets coming down the pike. It seems that money printing and a debt-financed “recovery” lead to higher long-term interest rates. The more convincing the recovery, the higher interest rates will go. The higher interest rates go, the further the housing market will drop. The further housing prices drop, the number of underwater homeowners will grow to 30%. This will lead to more foreclosures. About 50% of all the assets on banks’ books are backed by real estate. Billions in bank losses are in the pipeline. Do you see the Catch-22 in Bernanke’s master plan? The Dallas Fed sees it:

This unease highlights the housing market’s fragility and suggests there may be no pain-free path to the eventual righting of the market. No perfect solution to the housing crisis exists. The latest price declines will undoubtedly cause more economic dislocation. As the crisis enters its fifth year, uncertainty is as prevalent as ever and continues to hinder a more robust economic recovery. Given that time has not proven beneficial in rendering pricing clarity, allowing the market to clear may be the path of least distress.

Quantitative Easing Catch-22

Ben Bernanke’s quantitative easing (dropping dollars from helicopters) is riddled with Catch-22 implications. Bernanke revealed his plan in his 2002 speech about deflation:

The US government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many US dollars as it wishes at no cost.

The expectations of most when reading Bernanke’s words were that his helicopters would drop the dollars across America. What he has done is load up his helicopters with trillions of dollars and circled above Wall Street for two years continuously dropping his load. Bernanke’s quantitative easing, which will triple the Fed’s balance sheet by June of 2011, began in earnest in early 2009. The price for a gallon on gasoline was $1.62. Today, it’s $3.05, an 88% increase in two years. Gold was $814 an ounce. Today, it’s $1,421 an ounce, a 61% increase in two years. In the last year, the prices for copper, silver, cotton, wheat, corn, coffee, and other commodities have risen in price by 30% to 90%.

Quantitative easing has been sold to the public as a way to avoid the terrible ravages of deflation. The fact is there are less jobs, lower wages, lower home prices, zero returns on bank deposits, higher fuel costs, higher food costs, higher real estate taxes, higher medical insurance premiums, and huge jaw-dropping bonuses for the bankers on Wall Street. Somehow the government has spun this toxic mix into a CPI that has resulted in fixed-income senior citizens getting no increases in their Social Security payments for two years. You can judge where Bernanke’s helicopters have dropped the $2 trillion. Quantitative easing has benefited only Wall Street bankers and the 1% wealthiest Americans. The $1.4 trillion of toxic mortgage-backed securities on the Fed’s balance sheet are worth less than $700 billion. How will it unload this toxic waste? The Treasuries it has bought drop in value as interest rates rise. Quantitative easing’s Catch-22 is that it can never be unwound without destroying the Fed and the US economy.

See also, Quantitative Easing Explained

The USD dollar index was at 89 in early 2009. Today, it stands at 79, an 11% decline, which is phenomenal considering that Europe has imploded over this same time frame. Bernanke’s master plan is for the USD to fall and ease the burden of our $14 trillion in debt. He just wants it to fall slowly. Foreigners know what he’s doing and are stealthily getting out of their USD positions. This explains much of the rise in gold, silver, and commodities. The rise in oil to $91 a barrel will not be a top. The Catch-22 of a declining dollar is that prices of all imported goods go up. If the dollar falls another 10%, the price of oil will rise above $120 a barrel and push the economy back into recession. Then there is the little issue of at what level of printing and debasing the currency does the rest of the world lose its remaining confidence in Bernanke and the USD.

A few other “minor” issues for 2011 include:

  • The imminent collapse of the European Union as Greece, Ireland, Portugal, and Spain are effectively bankrupt. Spain is the size of the other three countries combined and has a 20% unemployment rate. The Germans are losing patience with these spendthrift countries. Debt does matter.
  • State and local governments were able to put off hard choices for another year, as Washington DC handed out hundreds of billions in pork. California will have a $19 billion budget deficit; Illinois will have a $17 billion budget deficit; New Jersey will have a $10.5 billion budget deficit; New York will have a $9 billion budget deficit. A US Congress filled with newcomers will refuse to bail out these spendthrift states. Substantial government employee layoffs are a lock.
  • There is a growing probability that China will experience a hard landing as its own quantitative easing has resulted in inflation surging to a 28-month high of 5.1%, with food inflation skyrocketing to 11.7%. Poor families spend up to half of their income on food. Rapidly rising prices severely burden poor people and can spark civil unrest if too many of them can’t afford food.
  • The Tea Party members of Congress are likely to cause as much trouble for Republicans as Democrats. If they decide to make a stand on raising the debt ceiling early in 2011, all hell could break loose in the debt and stock markets.

The government’s confidence game is destined to fail due to Catch-22. Will the consensus forecast of a growing economy, rising corporate profits, 10% to 15% stock market gains, 2 million new jobs, and a housing recovery come true in 2011? No it will not. By mid-year, confidence in Bernanke’s master plan will wane. He is trapped in the paradox of Catch-22. When you start hearing about QE3 you’ll know that the gig is up. If Bernanke is foolish enough to propose QE3 you can expect gold, silver, and oil to go parabolic. Enjoy 2011. I don’t think Ben Bernanke will.

“That’s some catch, that Catch-22.” – Yossarian

Q2 GDP growth revised down to 1.6 percent

In case you missed it…

VP Joe Biden: “Are we headed in the right direction? The economic initiatives that we took, they are working … they are working.”

Obama: “I’ve never been more confident that our nation is headed in the right direction.”

The economy apparently doesn’t agree with either of them. Liberal/progressive policies – FAIL.


Instant View: Q2 GDP growth revised down to 1.6 percent

On Friday August 27, 2010, 9:11 am EDT

NEW YORK (Reuters) – U.S. economic growth slowed more sharply than initially thought in the second quarter, held back by the largest increase in imports in 26 years.

KEY POINTS: * Gross domestic product expanded at a 1.6 percent annual rate, the Commerce Department said, instead of the 2.4 percent pace it had estimated last month. * The reading was a touch better than market expectations. Analysts polled by Reuters had forecast GDP, which measures total goods and services output within U.S. borders, revised down to a 1.4 percent growth rate. The economy grew at a 3.7 percent pace in the first three months of the year. * The revised GDP data will likely fuel analysts’ concern that the economy is at growing risk of slipping back into recession. Federal Reserve policymakers were meeting on Friday at their annual retreat in Wyoming to ponder the economy’s direction and hear from Fed Chairman Ben Bernanke.



The numbers are showing “there is recovery, but earlier this year the (stock) market was too enthusiastic about a seamless recovery back to the good times. In the last few weeks it’s been too concerned about going to a double dip, so the bounce we’re seeing today is day-to-day volatility on the recovery scenario.”


“The market is off rather harder than we would have thought on this, and surely we can’t see anything in this report to justify much of a response. Fives and tens are leading the weakness — watch tens versus 2.55-plus percent. We are impressed with the tens/thirties flattening and note the 101 basis point level was the breakout from July and so an important support. Below this we have a 93-95 basis point target.”


“Recent economic data has been so very weak, but the GDP numbers today show that this may not be the end of the world. We are seeing a relief rally because we saw a lot of selling coming into it but I see this more as a short term bounce. We came very close to closing at 1,040 (on the S&P 500) yesterday which is a logical place for buyers to come into the market in a technical point of view. Now, we have bit of a fundamental driver as well for investors to buy stocks.”


“The substantial downward revision in Q2 GDP from the 2.4 percent first reported to 1.6 percent was expected and was all due to foreign trade: lower exports and higher imports. Up until this year U.S. GDP was getting a boost from its foreign trade position, but that has all evaporated. Europe is barely growing outside of Germany and where there’s growth it’s coming from foreign trade. A widening trade gap holds down U.S. growth and makes the global recovery less secure.

“U.S. bonds are down on the rumor trade before Bernanke. The market is setting itself up for a potential bloodbath today because it’s not clear that Bernanke can stick his neck out and talk about a major change in quantitative easing with a substantial minority of his Federal Open Market Committee members expressing reservations.

“There is a touching faith that Bernanke sets the economic agenda for Congress, the Administration and the Federal Reserve and the markets seem to think Bernanke can initiate wide-ranging efforts.

“Bernanke can’t announce a Marshall Plan to deal with mortgage foreclosures or small business lending, but the markets are acting as if they think he can.

“Bernanke could say the President has asked him to help out with a Marshall Plan for the mortgage situation, but he can’t take the first step, at least in public.”


“The instant reaction is that it isn’t good but we thought it might be worse, so there might be a bit of relief.

“But on reflection I think people will decide these numbers will confirm the economy is slowing sharply. You combine these with any other numbers we’ve gotten from the third quarter and there’s little reason to think the (next) quarter is going to be better.”


“On marginal side, it’s good news. I don’t know if this tells us very much about a double-dip (recession). We have already seen soft data over the last two months.

“Bernanke has to acknowledge the soft data over the last two months and give his outlook on how the economy is evolving. He has to explain the thinking behind the Fed’s August action to hold the Fed’s balance sheet steady and any possible policy action going forward.”


“Overall it is a little bit better than some of the fears out there. The composition of growth is a little bit more favorable than we were looking for, most importantly services consumption, which has been an area of the economy showing puzzling weakness. (This) has started to pick up a little bit in the second quarter. So consumer outlays are on an improving path. That is a positive sign for the outlook and the data is a little more favorable than some people had feared.

“This offsets (recent weak data) only a little bit. The problem with the outlook is that indicators that have historically been reliable leading indicators have begun to deteriorate. Manufacturing orders, claims for unemployment benefits, survey-based data, a whole host of indicators that typically lead real measures of activity like GDP, employment, production, et cetera are turning worse. It seems only a matter of time before GDP slows a bit further.

“That being said, I think it is important to keep in mind that this GDP report emphasizes that the recovery is a year mature and that we are on a growth path. There is a bit of momentum in the economy now and it will take a pretty big shock to dislodge it off of that course.”

MARKET REACTION: STOCKS: U.S. stock index futures added to gains BONDS: U.S. Treasury debt prices extended losses DOLLAR: U.S. dollar added to gains against the yen


Fed Hiding Truth about “Stimulus”: Seeks Delay of Bank Data Release

Don’t you as a taxpayer have a right to know, and wouldn’t you like to know where all that “stimulus” money went that didn’t seem to do any actual “stimulatin’?”  Why all the effort to keep us from seeing what the government is actually doing?  They couldn’t possibly have anything to hide, COULD THEY?


Fed Seeks Delay of Bank Data Release While Considering Appeal

By Bob Ivry and David Glovin – // Aug 25, 2010 11:01 PM CT

Aug. 23 (Bloomberg) — Bloomberg’s Amanda Bennett talks about an appeals court’s refusal to reconsider a decision compelling the Federal Reserve Board to release documents indentifying banks that might have failed without the U.S. government bailout. Unless the court stays its decision, the Fed will have seven days to disclose the documents. Bennett talks with Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

The Federal Reserve Board sought to delay the court-ordered release of documents identifying banks that might have failed without the U.S. government bailout while it considers an appeal to the U.S. Supreme Court.

The Fed asked the U.S. Court of Appeals in New York yesterday to delay implementation of a ruling that compels the central bank to release the documents.

“The stay is necessary to permit the board to consult with the Department of Justice regarding an appeal to the Supreme Court,” Fed spokesman David Skidmore said.

The appeals court on Aug. 20 denied the Fed’s request to reconsider its decision requiring it to release records of the $2 trillion U.S. loan program.

If the stay is granted, the central bank and the Clearing House Association LLC, an organization of 20 commercial banks that joined the Fed in defense of the lawsuit, will have 90 days to petition the Supreme Court to consider an appeal. The Clearing House has said already it will ask the high court to rule on the case.

At issue are 231 “term sheets” documenting Fed loans to financial firms during 2008. The records, which include the banks’ names and the amounts borrowed, were originally requested by late Bloomberg News reporter Mark Pittman through the Freedom of Information Act, which allows citizens access to government papers.

The appeals court upheld a decision of a lower-court judge who in August 2009 ordered that the information be released.

The Fed argued in the case, which was brought by Bloomberg LP, the parent of Bloomberg News, that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help.

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 09-04083, U.S. Court of Appeals for the Second Circuit (New York).

To contact the reporters on this story: David Glovin in New York at dglovin@bloomberg.net; Bob Ivry in New York at bivry@bloomberg.net.


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