Sanders - GAO Finds Serious Conflicts at the Fed

[slipslidingaway]

Thanks to DUer CountAllVotes who posted this in the economy forum.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=91526&mesg_id=91526

http://sanders.senate.gov/newsroom/news/?id=70c40aba-736c-4716-97d1-45f1a1af10a0
http://sanders.senate.gov/imo/media/doc/d1218%20(2).pdf


"A new audit of the Federal Reserve released today detailed widespread conflicts of interest involving directors of its regional banks.

...The GAO detailed instance after instance of top executives of corporations and financial institutions using their influence as Federal Reserve directors to financially benefit their firms, and, in at least one instance, themselves. "Clearly it is unacceptable for so few people to wield so much unchecked power," Sanders said. "Not only do they run the banks, they run the institutions that regulate the banks."

...The corporate affiliations of Fed directors from such banking and industry giants as General Electric, JP Morgan Chase, and Lehman Brothers pose "reputational risks" to the Federal Reserve System, the report said. Giving the banking industry the power to both elect and serve as Fed directors creates "an appearance of a conflict of interest," the report added.

...In the dry and understated language of auditors, the report noted that there are no restrictions in Fed rules on directors communicating concerns about their respective banks to the staff of the Federal Reserve. It also said many directors own stock or work directly for banks that are supervised and regulated by the Federal Reserve. The rules, which the Fed has kept secret, let directors tied to banks participate in decisions involving how much interest to charge financial institutions and how much credit to provide healthy banks and institutions in "hazardous" condition. Even when situations arise that run afoul of Fed's conflict rules and waivers are granted, the GAO said the waivers are kept hidden from the public..."