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Posted by on Sep 7, 2011 in In The News, TG Roundup

For the Corrupt Feds, Wall Street is the Main Street!

Yet Another NY Fed Governor Employed by the Financial Speculators

If you think that there is excessive corruption only in South Asian countries like India or other third world countries, think again. The corruption in United States is at times 1000s of times worse. Here it is more institutionalized. I present to you one such institution – The Federal Reserve Board of New York. The purported charter of NY Fed, as per their website, is the following:

The Federal Reserve Bank of New York works within the Federal Reserve System and with other public and private sector institutions to foster the safety, soundness and vitality of our economic and financial systems.

The Federal Reserve Bank of New York is one of 12 regional Reserve Banks which, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Fed, as the system is commonly called, is an independent governmental entity created by Congress in 1913 to serve as the central bank of the United States. It is responsible for

  • formulating and executing monetary policy,
  • supervising and regulating depository institutions,
  • providing an elastic currency,
  • assisting the federal government’s financing operations, and
  • serving as the banker for the U.S. government.

NY Fed, is supposed to be an “independent government entity!” By definition, any government entity is expected to be for the people, by the people. Not so with the Feds. Especially NY Fed. Especially in the last 20 years during which time the NY Fed has a history of being too cozy with Wall Street and represent Wall Street interests. Even if their policies created a moral hazard, the NY Fed didn’t care.  Here are some example of the ‘accomplishments’ of NY Fed in the last 20 years.

  • Orchestrated the bailout of LTCM. Couple this with deregulation – what we have is moral hazard, excessive leverage and unchecked speculation. Privatizing profits and socializing losses.
  • Orchestrated the 2008 bailout of the Wall Street speculators with tax payer funds. The results: A record $145 billion bonuses for Wall Street parasites where as 8 million jobless stand in food stamp lines.
  • Remember TeluGlobe Article: This Guy Should be Prosecuted on the former NY Fed Governor Steve Friedman? While the 2008 bank bailout was happening, Fridman was also a director at Goldman Sachs and he bought over 50,000 shares of Goldman in the open market at rock bottom prices. When NY Times exposed this story in October 2009, he hurriedly resigned as NY Fed.

And now there is a new outrage by another NY Fed official. In an attempt to pressure New York Attorney General Eric Schneiderman to back off investigating criminal behavior by the big Wall Street banks and major mortgage firms who helped cause the 2009 economic collapse, NY Fed Governor Kathryn Wylde  told Schneiderman:

“It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ‘em or hate ‘em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”

NY Times has more:

The deal would require Bank of America to pay $8.5 billion to investors holding the securities; the unpaid principal amount of the mortgages remaining in the pools totals $174 billion. Lawyers representing 22 institutional investors, including the Federal Reserve Bank of New York, BlackRock and Pimco, contended that the deal was favorable.

This month, Mr. Schneiderman sued to block that deal, which had been negotiated by Bank of New York Mellon as trustee for the holders of the securities. The lawsuit contends that the deal could “compromise investors’ claims in exchange for a payment representing a fraction of the losses” experienced by investors and that it had been negotiated without the knowledge of all of the holders of the securities.

The lawsuit angered Bank of New York Mellon, and as Mr. Schneiderman was leaving the memorial service last week for Hugh Carey, the former New York governor who died Aug. 7, an attendee said Mr. Schneiderman became embroiled in a contentious conversation with Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public. Ms. Wylde, who has criticized Mr. Schneiderman for bringing the lawsuit, is also chief executive of the Partnership for New York City. The New York Fed has supported the proposed $8.5 billion settlement.

Other investors in the Countrywide mortgage pools who were not part of the settlement talks between Bank of New York Mellon and Bank of America have called the terms inadequate.

Characterizing her conversation with Mr. Schneiderman that day as “not unpleasant,” Ms. Wylde said in an interview on Thursday that she had told the attorney general “it is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”

Mr. Schneiderman declined to comment on the encounter.

What more proof do you want to believe that the Feds represent only the interest of financial bandits?

Wylde is redefining the NY Fed charter: appointed by the people, for the financiers, by the financiers. Why is she not fired?