Sanders Defends Amendment To Audit The Fed

Sen. Bernie Sanders (I-Vt.) insisted on Friday that his amendment within a Senate financial regulatory reform bill to audit the Federal Reserve (Fed) would not grant Congress the authority to set monetary policy.

“That was not my intent,” Sanders said to reporters.

Sanders’s effort received a huge boost last night when he was able to strike a deal on the amendment with Senate Banking Committee Chairman Chris Dodd (D-Conn.) Under the agreement, the Government Accountability Office (GAO) would be authorized to perform a full audit of the Fed, going back to December 1, 2007. If the bill is signed into law, the GAO would be required to publish its findings online no later than one year after the law is enacted.

Most analysts say the amendment is not too radical of an idea. Sanders, on Friday, said it’s really just a matter of bringing about common-sense transparency to the financial system.

“The American people have a right to know what [Fed Chairman] Ben Bernanke has refused to allow them to know,” said Sanders, who admitted that the Chairman “is not one of my best friends.”

Indeed, the powerful banking agency along with firms on Wall Street are aggressively pushing back on the provision. Earlier this week, Bernanke wrote a letter to Dodd urging him to strip the amendment from the bill. But with Dodd -- the bill’s author -- as well as conservative South Carolina Republican Jim DeMint both saying they support Sanders, the measure looks like a safe bet to end up in the final Senate bill. Now, the question becomes whether or not it will survive a potential conference committee.

“Some of [the House bill’s] language is stronger that what we have, some of our language is stronger than what they have,” said Sanders, adding that the only thing on his mind right now is getting the 60 votes necessary to move forward on the legislation.

Levin Wants Clamp Down On Speculative Actions Of Investment Banks

By Justine Rellosa
Talk Radio News Service

With top executives from investment bank Goldman Sachs set to testify Tuesday in front of a Senate Government and Homeland Security subcommittee, Sen. Carl Levin (D-Mich.) today showcased approximately 500 pages of documents that illustrate how the scandal-riddled investment bank “repeatedly put its own interests and profits ahead of the interest of its clients.”

“For large fees, Goldman helped run the conveyor belt that dumped hundreds of billions of dollars of toxic mortgages into the financial system,” said Levin, who chairs the subcommittee that will host Tuesday's hearing.

The documents the Senator previewed included internal reports and emails that, according to Levin, show Goldman Sachs betting against the mortgage market throughout 2007, despite the fact that the company has denied such accusations.

“Its own documents show that it engaged in what one top executive described as 'the big short,'” said Levin. “Not hedging, but betting heavily against the market.”

"We cannot have this kind of a gambling house...making bets," Levin added. "We cannot allow this to continue."

The Senator announced that the committee will decide after the hearing on Tuesday whether they will refer this matter to the SEC and to the Justice Department for further consideration.

Bonuses From Companies Bailed Out By TARP Could Be Taxed

By Laurel Brishel Prichard University of New Mexico/ Talk Radio News Service

Sen. Barbara Boxer (D-Calif.) and Sen. Jim Webb (D-Va.) introduced a bill that would tax bonuses distributed by financial institutions bailed out by the Troubled Assets Relief Program (TARP) during a press conference Thursday afternoon.

The bill would place a 50 percent tax on bonuses over $400,000. Some of the companies that would be hit include Bank of America, Citigroup, Goldman Sachs, Merrill Lynch, Morgan Stanley, JP Morgan and Wells Fargo.

The bill would require a tax on the bonuses even if the companies have already paid back the money initially received through TARP.

“If your going to get that kind of bonus, you can share it 50-50 with the people who helped bail you out. We believe that's fair, reasonable and its not any example of what people will call class warfare,” said Webb.

Both Senators hope for bipartisan support on the bill.

Who's to blame for Lehman Brothers bankruptcy?

The general consensus was "jail not bail" for Lehman Brothers CEO Richard Fuld, Jr., at a hearing by the House Committee on Oversight and Government Reform on the causes and effects of the Lehman Brothers bankruptcy. This view was held by the Committee, panel, and Code Pink protestors (who were eventually thrown out of the hearing). Congressman Jim Cooper (D-Tenn.) said, "Is this Wallstreet or a casino? Lehman did not find itself in this situation by accident. It as the unlucky draw of a consciously made gamble." Dr. Luigi Zingales of the University of Chicago pointed out that by bailing out these investment banks, we are giving them incentive to gamble at the cost of taxpayers down the line.

Nell Minow of the Corporate Library said that Fuld, "intentionally surrounded himself with people who are complicit. These were people who were getting side payments from the company. They had no incentive to provide any kind of independent oversight." Minow said that by doing so, Fuld created a false idea of the value of his company. These false ideas created high leverage rates, leaving little security in times of economic trouble, and eventually the downfall of Lehman Brothers. Minow proposed a general rule be mandated to pay executives based on the value of business rather than the volume of business. Peter Wallison of the American Enterprise Institute agreed that the only protection taxpayers have at this point is more government regulation.

Additionally, Congressman Dennis Kucinich (D-Ohio) said, "there is an apparent conflict of interest permitting Treasury Secretary Paulson, former CEO of Goldman Sachs, to be involved in these discussions on the survival of Lehman Brothers." The panel agreed it was clear that Goldman Sachs benefits from Lehman Brothers going under, due to the competitive market they're in. As long as Goldman Sachs' interest is in Paulson's pocket, Kucinich says, his role in the bailout goes "against the free market."