Desert Pundit

I had just mailed a letter to Senator Kyl asking him why he voted against the Vitter amendment that requires a Federal Reserve audit, and when I sat down at the computer I find his answer!

Senator Kyl makes a bunch of weasel excuses as to why the Federal Reserve should be allowed to make secret decisions that destroy our economy and enrich the Too Big To Fail banks.

First, it is important to note that the Federal Reserve’s Board of Governors, the Federal Reserve Banks, and the Federal Reserve System as a whole are already audited annually by an independent outside auditor (currently, Deloitte and Touche).

I don’t want to know if they follow Generally Accepted Accounting Principles.  These are smart people, there shouldn’t be a question that they put something in the credit column that should be in the debit column.

The Government Accountability Office (GAO) also already audits the supervisory and regulatory functions of the Federal Reserve to the same extent that it audits the supervisory and regulatory functions of other federal banking agencies.

So what?  We aren’t interested in auditing their rules as to how they supervise and regulate banks.  This paragraph is misdirection.  The topic is the Vitter amendment, Senator.

Moreover, Congress already has the authority to conduct oversight of the Federal Reserve’s operations:  the members of the Federal Reserve Board are, for example, subject to the advice and consent of the Senate; the Fed Chairman testifies regularly before the Congress; and, of course, the Fed was created by an act of Congress and remains accountable to it.

You voted no on his second confirmation (first was a voice vote so we don’t know how he voted), and now you show support by saying in effect, “I’ve done enough.”

What is excluded from the scope of the GAO’s existing audit authority is the Federal Reserve’s monetary policy deliberations and operations, including open market and discount window operations, and transactions with foreign central banks, foreign governments, and public international financing organizations.

And those are exactly the things we want to know.

Those activities are excluded in order to preserve the independence and efficacy of the Federal Reserve’s monetary policy decisions.  In other words, the exclusion is intended to keep politicians from undermining the Fed’s independence and injecting political considerations into the conduct of monetary policy – something that could lead to rampant inflation.

Hold up there, pardner.  You were just claiming oversight in the last paragraph.  Now you claim that oversight would be intruding on the Fed’s independence.  Which is it, because you cannot have it both ways.  And it is exactly the Fed’s ability to inject insane amounts of money into the economy that causes inflation.   http://economics.about.com/cs/money/a/print_money.htm

The Senate considered two audit-related amendments on May 11, 2010.  The first was an amendment by Senator Bernie Sanders.  The original version of his amendment would have authorized a full GAO audit of the Fed, including its monetary policy operations.  But the administration had indicated that the President might veto it; so, Senator Sanders worked with members of the Banking Committee and the administration to reach a compromise.

Oh, well, the President might veto it! Well, let’s not annoy the President by making him pull out the veto pen. Let’s not put the President on record by having to take a stand. Show a backbone, Senator.

What they came up with was a modified version of the amendment that would require the Federal Reserve to provide details about the emergency lending programs that it implemented since 2007 in an effort to address the liquidity crisis that gripped the financial markets.  The Fed would be required to provide information about how much money went to borrowers, the dates the assistance was provided, terms of repayment, and the rationale for the creation of the lending programs.  The modified Sanders amendment would also require the GAO to complete an audit within a year, but preserve the exclusion for the Federal Reserve’s monetary policy deliberations.  The amendment passed on a vote of 96 to 0.  I supported it.

The one-time Government Accounting Office audit is a start, I would have voted for it, too.  But why not make it permanent?

The second amendment was offered by Senator David Vitter and largely tracked the original version of the amendment that Senator Sanders had offered.  It would have permitted the GAO to probe the Fed’s monetary deliberations, and it was rejected on a lopsided vote of 37 to 62.  I voted against it.

In addition to the concern noted above about injecting political considerations into monetary policy decision-making, I am concerned that a GAO audit of the Fed’s open market operations could end up costing taxpayers billions by giving investors a road map to the Fed’s trading strategies and the securities it intends to buy.  Armed with information about the securities the Fed intends to buy (that is, information gleaned from an audit), investors could acquire the securities and then sell them to the Fed at a premium.

First, audits are after the fact events, not play-by-play twitter feeds.  Second, if someone bought securities expecting a sure sale to the Fed at a higher price, would that not achieve the result they were trying to achieve? And is this method so much worse than what the Fed does now by enabling the Dollar carry trade? Third, why the hell is the Fed buying securities anyway?  As an investor, do you want to compete with a bottomless bucket of money?

I hope this information is helpful.  If you have any other comments or questions, please don’t hesitate to let me know.

It has been very helpful to find out you are a apologist for secret management of our money.

Two men on the ASU campus were pretending to be Tempe plainclothes detectives and asking for IDs to verify immigration status.  First, SB1070 doesn’t go into effect for 90 days. Second, impersonating an officer is a felony, and these clowns need to be sent to prison.

Wow.  To think that a U.S. Congressman would call for a boycott of his own state in the middle of a recession.  That’s what Raul Grijalva did yesterday.  In a down economy, to advocate making things even worse, by a Congressman … how can he in good conscience advocate that position?  The people most affected by a boycott will be the lower paid workers at convention centers and hotels.  If a hotel doesn’t have guests, who gets laid off?  Maids and restaurant staff.  These are the people that elected Grijalva supposedly, and he is willing to throw them under the bus for his political position.  You can oppose the Arizona bill, but calling for a boycott of your own state is just ridiculous.

In the audio for this story on NPR’s All Things Considered, Ben Schmitt, of the Detroit Free Press, says that “… the purchasing of heavy artillery like AR-15 weapons …” (2:45 in the audio).

Who assigns these reporters?  Does a journalism degree somehow confer automatic expertise in everything?  Let’s make some comparisons, shall we?  The purchasing of semi-trucks like a Volkswagen bug.  Enormous buildings like a shed.  Large oceans like a wading pool.

This is supposed to be a professional reporter.  He earns his living using words precisely.  And then on a national interview says that the AR-15 is heavy artillery?  Good grief!

A New York bank to take over …

Desert Hills Bank, Phoenix, Arizona, was closed today by the Arizona Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with New York Community Bank, Westbury, New York, to assume all of the deposits of Desert Hills Bank.

Press Release

Failed Bank Information

You would think that people in New Hampshire would have better things to do with their time than worry about whether a toothless fish was nibbling the dead skin from peoples feet.  But you would be wrong.

But this isn’t just a story about cold places, it happens here too.  Who is on the Arizona Board of Cosmetology? (Google cache because their website won’t load)  Mostly people with business interests in cosmetology like Stephen Colarusso who lists he is “Involved in the advancement of all facets of cosmetology…”  Well, has he done studies of fish pedicures?  Has he a list of people that have been harmed?  Or is he just interested in protecting his business?

I think what this document says is that the Cosmetology Board of Arizona had a budget (excluding any federal money) of $1.844,300.  They implemented a budget reduction of $276,600, almost meeting the reduction goal (99.98%, not the 100% of the report, but who’s counting?  Well, I am, $45 means something to me.)  Now I don’t really know if the $1.8 million is before or after the reduction, but here’s a radical idea for you …  Just eliminate all of it!  The nail salons and make up people that do a bad job won’t have any customers and go out of business.  Let’s err on the side of freedom and let people decide for themselves if they want fish pedicures.

The Census Bureau promises to keep our information private.  That the information cannot be used against us. The Christian Science Monitor lays out how the Census Bureau has revealed the information of citizens in the past.  And then lied about it.  James Bovard ends his article …

The more information the government collects on people, the more control it will have over them. The Constitution requires that the population be counted every 10 years to apportion seats in the House of Representatives. All the census really needs to know is how many people live at each address. Citizens should refuse to answer any census question except for the number of residents. A partial boycott of the census questionnaire is a tiny but important step to safeguard our remaining liberties. Citizens are not obliged to pave the data highway for Leviathan’s next intrusion into their lives.

No matter what your political ideology, can you really trust the government to do the right thing?

There are a lot of ads, telling us we need to respond to make sure “our community” gets all the money it deserves. They even recruited Miss Arizona.  But why should we be thankful and beholden to a federal government for giving us back what was originally our money in the first place?  And the federal government gets to say  how that money is to be spent.  I have a better idea, let us keep our money and then we can decide where we want to spend it, or even if we want to spend it.

And they promise that when we answer their snoopy questions, that our personal information is protected.  Well, protected by what?  Armed guards? Computer firewalls? Thick concrete walls?  No, no and no.  It is protected by “Title 13 of the U.S. Code“!  Whew, what a relief!  Wait … that’s not really protection, that just means that if someone is sworn not to reveal the information, does so anyway, gets caught and is successfully prosecuted, the absolute maximum they will get is $5,000 fine and 5 years in jail no matter how much information they reveal.  Now 5 years is nothing to take lightly, but I could see someone being tempted on a chance of being caught.  Armed robbers of convenience stores take about the same risk, for not much payoff.  To say that our information is protected by the U.S. Code is just silly.

On Meet the Press this morning, John Boehner (R-OH) said a couple of times that votes on Obamacare had been on strict party-line votes.  How is that again?  If they had been strict party-line votes, it would have passed months ago.  The fact that some Democrats sided with all the Republicans means that, by definition, it was not a strict party-line vote.

I can’t find mention of his passing in the Republic online even though he lived in Scottsdale. He was the NASA artist. Here is an article more comprehensive than I could write.  My sympathy to his family, he will be missed.