Section 13-3 of the Federal Reserve Act delivers the Authority to the Federal Reserve to use taxpayer’s salaries to bailout private companies and governmental organizations who the Independent-From-Government Federal Reserve deems necessary and “too big to fail”, but it must have 5 of its board of governors approve any action of this caliber.
The language within the Federal Reserve Act is much more eloquent and deceiving, but that is not the point here. The point is that recently released information is hinting that a new bailout may be in the works, although the 5 members requirement for a bailout may face some trouble, along with some problems in the Senate.
“In March, the Senate Banking Committee voted out President Obama’s latest nominations to the Board of Governors of the Federal Reserve System, Jeremy Stein and Jerome Powell” [Source]
Currently, this leaves 2 of the positions on the Board of Governors of the Federal Reserve awaiting affirmed nominees, while another position, held by Elizabeth A. Duke, has already expired on January 31st, although she still holds the position.
Why she is still illegally holding the position is beyond me, possible awaiting the 2 vacant positions to get filled so that they may pass a bailout without the other 2 vacancies or with the nominated individuals when they arrive. We are talking about an Unconstitutional organization to begin with, so determining what is going on behind closed doors is difficult.
Recent over the counter information from the Wall Street Journal shows that JP Morgan and Goldman Sachs are putting pressure on Senator Vitter, the man responsible for stopping the obama board of governor nominees, to let go and let them take their seats.
Interesting information seeing as JP Morgan just announced last week it lost 2 billion, with much more expected to come over the next few months according to financial experts. As I mentioned, this major loss by JP morgan may be influencing the vacancies and Mrs. Duke’s over-extended stay, so this is another situation I would watch closely.
Now, a bailout is not confirmed, but these are all signs that something is in the works, with pressure coming from Wall Street, the Fed, and the Executive branch on Congress to approve the nominees. Nominees to the Board of Governors serve hefty 14 year terms, are appointed by the President, and must be approved by the Senate. The Board of Governors is the main power house of the Federal Reserve.
Once again, the Fed must have approval from at-least 5 out of the 7 board of governors, and since there are only 5 members currently present, with one serving beyond her term, any bailout attempt may be risky if one member votes no (I have no information on the possibility of that). I have read that the 2 suggested nominees, Stein and Powell, are two individuals who would agree to a bailout and are of the interventionist-Keynesian “school”, as opposed to the Austrian School which has predicted and explained most crashes our economy has faced.
As Mark Calabria points out, Senator Reid has the power to call the vote on the nominees to the floor at *any* time, but has not done so, which delivers a little mystery to the entire situation.
Either Harry Reid is waiting for some type of additional financial crisis or event to make the move, or some type of situation that would guarantee the approval of the nominees, or he doesn’t want to bring the Federal Reserve to discussion upon an election and so recently after the Congressional Hearing last week with Chairman Ron Paul titled “Abolish or Reform the Federal Reserve” and the heat already on the Fed.
From my understanding, Reid may already have the required 60 members to approve the nominees, but he has not taken much action yet, which is why I advise everyone start putting pressure on their Senators to not approve these members and to make sure there is a LARGE discussion on the floor if the motion is brought to the floor.
I also advise any and all to make calls to Senator Vitter, and tell him not to let up and thank him for stopping this for now, and also Senator Rand Paul, who will most definitely make a strong attempt to stop this nonsense. I don’t know Vitter’s record, I just know that he has apparently stopped this, and I can thank him for that.
Contact Senator Vitter
UPDATE May 17th, 2012: Senate VOTING THIS AFTERNOON TO CONFIRM/VETO NOMINEES. CALL/EMAIL/WATCH CLOSELY.
Any more information I can find will be posted here or in a new post linked to from here, for now, here are some useful tools:
Find Your Senator and His/Her Contact Information HERE.
Important Fed Related Info:
Taken From a Previous Post on the last bailout failure in the USA:
Since the recent Housing Financial Crisis, the Fed has gained more attention from the public because of the 16.1 Trillion Dollars in loans it gave out between December 1st, 2007 and July 21st, 2010, to Domestic and Foreign Banks & Governments revealed with the GAO Audit, without any approval from Congress or the people through their legislature.
Page 131 of the GAO Audit, or Page 144 of the document on the website is it linked to (Click HERE for Direct), shows that the complete balance of loans added up to 16.1 Trillion with a capital T dollars, much more than the 1.2 Trillion discussed by certain news outlets, and double the Bloomberg figure of 7.77 Trillion.