Federal Reserve System

10 things you need to know today: October 9, 2013

Yellen will be the first woman to lead the Fed (AP Photo/Eugene Hoshiko)

The Week

Obama picks Janet Yellen to lead the Fed, the shutdown cuts off military death benefits, and more

1. Obama to nominate Janet Yellen for Fed chair
President Obama plans to nominate Janet Yellen to succeed Ben Bernanke as head of the Federal Reserve, the White House said Tuesday. If Yellen is confirmed, the former University of California economist — currently the Fed’s vice-chair — will be the first woman to lead the central bank. Yellen would be a more popular pick than Obama’s reported first choice, former Treasury secretary Larry Summers, who withdrew in September due to stiff opposition to his candidacy. [Los Angeles Times]
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2. Shutdown cuts off military death benefits
The Pentagon said Tuesday that the government shutdown had left it unable to pay death benefits to the families of soldiers killed in action. After funding ran out for many federal agencies, Congress quickly passed the Pay Our Military Act, ensuring that active duty soldiers will continue to receive their paychecks, but the law didn’t cover the $100,000 typically sent to families of those killed, burial expenses, and other benefits. [New York Times]
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3. Off-duty cop accused of participating in road-rage attack
An off-duty New York City police officer was arrested Tuesday in connection with the beating of an SUV driver, Alexian Lien, who was chased down by a gang of motorcyclists after a fender bender. Detective Wojciech Braszczok was the fifth biker charged. The chase began after Lien — with his wife and 2-year-old daughter in the car — was threatened and took off, seriously injuring a biker. The whole thing was caught on a video uploaded to YouTube. [Reuters]
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4. Obama tells GOP to stop making “threats” 
President Obama on Tuesday stepped up his pressure on Republicans to pass a stopgap spending bill to end the government shutdown without forcing a delay of ObamaCare. In a White House news conference, Obama called on GOP lawmakers to “lift these threats from our families and our businesses” and avoid forcing the U.S. to default on its debts. Republicans say Obama is the onerefusing to negotiate. [New York Times]
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5. DNA match provides a break in 1991 murder 
New York police announced Tuesday that they had identified the mother of “Baby Hope,” a 4- to 5-year-old girl whose battered body was found stuffed in a cooler in 1991, through a DNA match. Investigators are now searching for the child’s father for questioning in the high-profile murder case. The mother never saw the girl and her younger sister again after their father left with them following the couple’s acrimonious break-up. [New York Daily News]
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6. The U.S. prepares to cut aid to Egypt
U.S. officials say the Obama administration plans to announce within days that it is reducing aid to Egypt’s military, which has been cracking down on supporters of ousted president Mohamed Morsi. Army chief Gen. Abdel-Fattah el-Sisi, in his first interview since the July coup, said Morsi could have prevented the crisis by resigning in the face of protests. Sisi left open the question of whether he would run to replace Morsi. [CNNWashington Post]
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7. Trouble in the house of the Kardashians
Kris Jenner, mother of the Kardashian sisters of tabloid fame, and her husband, former Olympic decathlon champion Bruce Jenner, announced in a joint statement that they have separated after 22 years of marriage. The couple, who put their personal lives on display in the reality TV showKeeping Up with the Kardashians, said in a joint statement: “We are living separately and we are much happier this way.” [BBC News]
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8. Passengers absorbed in smartphones didn’t notice gunman
The San Francisco Police Department said Tuesday that security footage showed that a man who killed college student Justin Valdez on a light-rail train had his gun in plain sight, but other passengers didn’t notice because they were staring at their smartphones. “They’re just so engrossed, texting and reading and whatnot,” said District Attorney George Gascon. Investigators believe suspect Nikhom Thephakaysone was hunting for a stranger to kill. [San Francisco Chronicle]
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9. Three share Nobel in chemistry
Three researchers have won this year’s Nobel Prize in Chemistry for their work in the 1970s developing computer models used to study complex reactions like photosynthesis and combustion, and how drugs interact. The Royal Swedish Academy of Sciences, which awards the Nobels, said the trio opened up new possibilities for chemists by making “Newton’s classical physics work side-by-side with the fundamentally different quantum physics.” [New York Times]
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10. Argentine president is recovering after surgery
Argentine President Cristina Fernandez de Kirchner underwent successful surgery to remove a blood clot outside her brain on Tuesday. The injury was the result of a fall in August. Doctors did not immediately say how long the 60-year-old president’s recovery would take, raising concerns three weeks ahead of legislative elections in which Fernandez’s governing party appears likely to lose strength over the country’s weakening economy. [Associated Press]

Rand Paul thinks Milton Friedman still alive, wants him as fed chair

Milton Friedman was one of the pioneers and foremost proponents of the laissez-faire economic theory collectively known as the Chicago School.

From the “stupid stuff TEApublicans think and say” category…

Daily Kos

Pure genius from presumed presidential contender and devotee of Austrian school economics, Sen. Rand Paul:

Who would your ideal Fed chairman be?
Hayek would be good, but he’s deceased.Nondead Fed chairman.
Friedman would probably be pretty good, too, and he’s not an Austrian, but he would be better than what we have.

Dead, too.
Yeah. Let’s just go with dead, because then you probably really wouldn’t have much of a functioning Federal Reserve.

Milton Friedman, of course, was one of the pioneers and foremost proponents of the laissez-faire economic theory collectively known as the Chicago School. According to Friedman’s biography at the website of the CATO institute, Friedman passed away in November of 2006.

For such a devotee of the neoclassical Austrian/Chicago economic theory as Senator Rand Paul purports to be, the passing of Milton Friedman would have been as the passing of Ronald Reagan to a prominent Republican politician. It would be the passing of an icon, something not easily forgotten. Yet somehow, Senator Paul let that minor detail slip from his brain. And we haven’t even gotten into the part where if Friedman were alive, he would have recently celebrated his 101st birthday. Or the fact that Friedman thought that Chile under Pinochet was a “miracle.”

All minor details in the long run.

 

Elizabeth Warren Grills Financial Regulators: ‘People Want to Know’ (Video)

Senator Elizabeth Warren is seriously kicking financial regulators’ butt..

AATTP

Elizabeth Warren, the Democratic Senator from Massachusetts, grilled two financial regulators this Thursday as to why the men were favoring big banks over families that are struggling.

The questioning took place during a Senate Banking Committee hearing where Warren took aim at Daniel P. Stipano of the Office of the Comptroller of the Currency and Richard Ashton of the Federal Reserve. The line of questioning centered around the Independent Foreclosure Review, which investigated foreclosure abuses that ended in January with a $8.5 billion settlement.

Warren claimed the two were withholding data obtained from the investigation. She asked whether they planned to disclose evidence of illegal activity to families who were in the middle if litigation with the banks for the wrongful disclosures, with Ashton responding that they had not made a decision.

“So I just want to make sure I get this straight,” Warren continued. “Families get pennies on the dollar in the settlement for having been the victims of illegal activities or mistakes in the banks’ activities. You now know individual cases where the banks violated the law and you’re not going to tell the homeowners, or at least it’s not clear if you’re going to do that?”  She added,

People want to know that their regulators are watching out for the American public, not for the banks, and the only way that we can evaluate whether or not you’re doing your job is if you make some of this information publicly available.

Watch Senator Warren in the video below.

Is Fox News REALLY This Stupid?

Courtesy of ShortFormBlog.com

No, but their audience is.  Therefore, they have to play to their base…

Addicting Info

It would appear so. Or at least they’re hoping their audience is:

Just to be clear, the Trillion Dollar Platinum coin does not actually have to be one trillion dollars worth of platinum in the same way the paper and ink used to make a dollar bill is not actually worth one dollar .

Also to be clear, the TDP coin is an example of how ridiculous the GOP threat over the debt ceiling is.

Here’s the skinny on the coin: The Treasury can’t just print money all willy-nilly, BUT it can mint a commemorative coin of pretty much any kind. Soooooo…some intrepid blogger suggested that they do exactly that: mint a coin “worth” one trillion dollars, hand it over to the Federal Reserve and taaaadaaaaa! A trillion dollar account to draw from.

It’s a thought-exercise in the same exact way the debt ceiling is a thought-exercise. The difference between, minting the TDP coin and not raising the debt ceiling, according to Paul Krugman, is:

“A choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious.” [Source]

Fox, of course, would be quite happy with the GOP crashing the economy because it would scare the bejeezus out of their viewers and that means ratings! To that end, they’ve decided that the TDP coin is a bad idea and either can’t be bothered asking an economist what it really means or delivering ridiculously bad information to their viewers.

Probably a bit of both.

Here’s the full explanation of the TDP coin and why the GOP/Fox/right wing media machine really wants it to go away. It’s very thorough and straight forward. Enjoy!

The Federal Reserve’s ‘breathtaking’ $7.7 trillion bank bailout

Surprise, the government lied to us…

The Week – By The Numbers

A new report by Bloomberg Markets Magazine details trillions of dollars in secret federal loans made to the big banks during the 2008 financial crisis, a process that helped them rake in billions of dollars in undisclosed profits. Here, some key numbers that illuminate the Federal Reserve’s “breathtaking”$7.7 trillion bank bailout:

29,000
Pages of federal documents, courtesy of the Freedom of Information Act, and central bank records that Bloomberg combed through to reveal a “fresh narrative of the financial crisis”

More than 21,000 
Number of transactions detailed in those pages

$7.7 trillion
Amount in undisclosed loans the Federal Reserve made to struggling financial institutions, according to the new Bloomberg report. That “dwarf[s] the Treasury Department’s better-known $700 billion Troubled Asset Relief Program [TARP],” say Bob Ivry, Bradley Keoun and Phil Kuntz at Bloomberg

$13 billion
Estimated amount in previously undisclosed profits the six largest banks —  JP Morgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs Group, and Morgan Stanley — took in, thanks to those loans and the Fed’s below-market rates. Unlike the TARP funds, “the loans came with virtually no strings attached for the banks,” says Travis Waldron at Think Progress

$160 billion
Amount in TARP funds the big six received

As much as $460 billion
Amount the big six borrowed from the Fed, as calculated by Bloomberg and measured by peak daily debt

$1.2 trillion
Amount that banks referenced in the new report required on December 5, 2008, “their single neediest day.” The Federal Reserve didn’t reveal to anyone which banks were in such dire need, say Ivry, Keoun, and Kuntz, and “bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy.”

$86 billion
Amount that Bank of America Corp. owed the central bank when then-CEO Kenneth D. Lewis wrote shareholders saying that he was at the helm of  “one of the strangest and most stable banks in the world” on November 26, 2008

$107 billion
Amount in secret loans that Morgan Stanley took in a single month, in September 2008

1 out of 10
Share of the country’s delinquent mortgages that amount could have paid off

$6.8 trillion
Total assets held by the big six on September 30, 2006

$9.5 trillion
Total held on September 20, 2011. Rather than help curb the practice that caused the financial crisis, “the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble,” say Ivry, Keoun, and Kuntz

Sources: BloombergBusiness InsiderThink Progress

The Median Net Worth Of A Member Of Congress Is Five Times Higher Than The Median American Household

This news is going to surprise a few people.  The majority of our Representatives in Congress and the Senate are millionaires.  That will explain their interest in keeping taxes low for “the rich”…

Think Progress

Part of the reason the richest 1 percent of Americans have captured our politics is because they are able to finance political races, issue campaigns, and lobbyists. But the other reason some of the richest Americans have been able to control our politics is because they themselves have gotten elected to positions of power at a much higher rate than the rest of us.

As Roll Call points out today, the estimated median net worth for a member of Congress in 2010 was $513,000 (this is strictly an estimate as assets are reported in ranges). Meanwhile, the Center for Economic and Policy Research’s David Rosnick points out that the net worth of the median household in the United States that same year was closer to $100,000:

For Congress, the median net worth in 2010 was about $513,000. For regular households, the Federal Reserve Board pegged that number at about $120,000 in 2008, and that number this year is probably around $100,000, [said economist David Rosnick]. While it is hard to make an exact comparison between Congress and the rest of the nation, what is clear is lawmakers “are all a lot richer than anything you would call a typical American,” Rosnick said.

The Center for Responsive Politics looked at the average wealth of members of Congress in between 2004 and 2009 (relying on estimates derived from ranges). In 2009, the average net worth of a senator $13.4 million. On the House side, it was $4.9 million:

Meanwhile, the average wealth of an American household is around a half a million dollars(dragged upwards from the median by high-wealth families). This isn’t to say that just because members of Congress tend to be much wealthier than most Americans that they necessarily will not legislate on behalf of the 99 Percent. But it is important to note that the wealth gap between Americans and their federal legislators is as wide as it is, even in a democratic system that is supposed to represent all Americans, not just the most wealthy.

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PERRY ON BERNANKE: ‘I DUNNO WHAT Y’ALL WOULD DO TO HIM IN IOWA BUT WE WOULD TREAT HIM PRETTY UGLY DOWN IN TEXAS’

There may be some merit in Governor Rick Perry’s premise that printing more money now, may cause some problems.  However, the larger issue from his statement begs for answers.

I wonder what Perry was talking  about when he said: “If this guy prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas.

Was he referring to the unusually high rate of capital punishment?  By an off-chance, could he be referring to Texas’ history of violence such as lynching and dragging people chained to a pick-up to their death?

I’d sure like the Governor to expound on his statement…

Think Progress

Texas Governor Rick Perry, who entered the presidential campaign on Saturday, appeared to suggest a violent response would be warranted should Federal Reserve Chairman Ben Bernanke “print more money” between now and the election.

Speaking just now in Iowa, Perry said, “If this guy prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas.

Printing more money to play politics at this particular time in American history is almost treasonous in my opinion.” Treason is a capital offense.

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Perry Reveals Plan For Total U.S. Anarchy: ‘Put A Moratorium On All Regulations’

The proposal by Texas Gov. Rick Perry, now officially a GOP presidential candidate, for President Obama to “put a moratorium on all regulations” seems like pure, unadulterated insanity.

That would mean no food inspections; no clean air; Wall Street repeating the same horrible things that nearly brought us to the brink of an economic disaster which was averted by a bail out.  Perry wants to try no regulations at all…for a while!

This kind of talk is insanity!

Think Progress

Today, Gov. Rick Perry (R-TX) issued the first policy position of his presidential campaign by asking the White House to issue a “moratorium on regulations across this country”:

 We’re calling today on the president of the United States to put a moratorium on regulations across this country, because his regulations, his EPA regulations are killing jobs all across America.

Watch it:

“We’re sending out a request today asking President Obama to put a moratorium on all regulations,” Perry said on WHO radio in Iowa, recorded live by ThinkProgress.

Under such a moratorium, the Food and Drug Administration would stop approving new drugsand preventing human experimentation; the USDA would stop checking for food safety; the EPA would stop monitoring for poisons in drinking water; the Library of Congress would stoploaning materials to blind people; the NTSB would stop investigating airplane accidents; HHS would end Medicare payments; no more patents, copyrights, or trademarks would be issued; DHS would stop protecting chemical facilities from terrorist attacks; the Treasury would stopprinting currency; financial sanctions on hostile nations like North Korea and Iran would end; and the Federal Reserve System would shut down.

Perry’s “moratorium on regulations” would mean a literal end to the rules of law in the United States. At least it would also mean that all of President George W. Bush’s midnight regulationsfavoring polluters and industry abuses would also be lifted.

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Obama Criticized Over Credit Rating Downgrade, Debt Ceiling Deal, Jobs, Afghanistan

No matter which way he turns, President Obama is being criticized about several issues this month…

The Huffington Post

It has been a lousy month for President Barack Obama. And August is not yet two weeks old.

Running for re-election, he’s getting beaten up from the political left for making too many concessions and for abandoning the positions on which he campaigned. And he’s being attacked from the right by Republican conservatives who claim his spending and taxing policies are hampering the economic recovery.

Over the past days, Obama has been confronted with humiliating blows on both the economy and in Afghanistan, while polls show deteriorating public support for both him and Congress amid growing public disillusionment with the nation’s policymaking process.

Usually, August is a steamy, lazy time in the nation’s capital when not much gets done and when both Congress and usually the president go on vacation.

But so far this month, the government avoided – just narrowly – a first-ever default on its financial obligations as it came just hours within beginning to run out of cash to pay its bills. A last-minute compromise with Republicans helped avoid the default but wasn’t enough to keep the government’s credit rating from being downgraded one notch from AAA to AA-plus by Standard & Poor’s.

Americans want their presidents to be problem solvers. But polls suggest that a majority of the public has lost faith in the ability of both the president and Congress to fix the ailing economy. More than two years into Obama’s presidency, the nation’s unemployment rate remains painfully high, and the Federal Reserve warns there’s little chance of major economic growth over the next two years.

“Obama’s trapped. He’s trapped by what happens with the financial crisis in Europe. He faces a Congress where Republicans will stop him dead in the tracks on his economic and jobs proposals,” said Thomas Mann, a scholar at the Brookings Institution. “And there’s a near consensus of pundits that he’s fundamentally flawed as a consequence of his personality.”

“He should be glad it’s more than a year before Election Day and not next August,” Mann added.

In its downgrade, S&P cited the inability of the political parties to find common ground on getting the U.S. financial house in order – and poor prospects for doing so anytime soon.

Continue reading here…

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Fortune Magazine: Surprise! The big bad bailout is paying off…

While at the doctor’s office today, I was thumbing through a July issue of Fortune Magazine. An article entitled Surprise! The big bad bailout is paying off caught my eye.  When I started reading the article, I couldn’t wait to get home to look up the article online.

I’m one of those that felt the bailout didn’t do anything for homeowners who were losing their homes.  The bailout should have been bigger.   That’s my biggest issue with the bailout.

However, a frequent meme on the right that the bailout was a disaster and failed miserably is false.

Here’s Fortune’s analysis:

CNN Money

The U.S. government’s often maligned $14 trillion intervention not only staved off global collapse – but is making money.

The bailout of the financial system is roughly as popular as Wall Street bonuses, the federal budget deficit, or LeBron James in a Cleveland sports bar. You hear over and over that the bailout was a disaster, it cost taxpayers a fortune, we didn’t really need it, it didn’t work, it was a failure. It has become politically toxic, which inhibits reasoned public discussion about it.

But you know what? The bailout, by the numbers, clearly did work. Not only did it forestall a worldwide financial meltdown, but a Fortune analysis shows that U.S. taxpayers are coming out ahead on it — by at least $40 billion, and possibly by as much as $100 billion eventually. This is our count for the entire bailout, not just the 3% represented by the massively unpopular Troubled Asset Relief Program. Yes, that’s right — TARP is only about 3% of the bailout, even though it gets about 97% of the attention.

A key reason for the rescue’s profitability is that the Federal Reserve System has already turned over more than $100 billion of bailout-related income to the Treasury, and is on track to turn over $85 billion more this year and next. That’s not something most people include in their math. On the negative side, we’re including what may be the first overall cost calculation of a special tax break that’s worth tens of billions of dollars to four big bailout recipients. And, of course, we’ve analyzed reports from the Congressional Budget Office, the Treasury, the Federal Deposit Insurance Corp., and other sources.

Read more here… 

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