White House Picks Wrong Side
WASHINGTON, May 1 – An unusual left-right coalition has formed against Wall Street and the White House in a fight for openness at the Federal Reserve.
Sen. Bernie Sanders (I-Vt.) today released new letters of support for an amendment that he plans to offer next week to make the Fed name banks that took trillions of dollars in secret subsidies.
The Obama administration has sided with the Fed and powerful Wall Street interests in opposition to the amendment. “When it comes to openness vs. secrecy, Wall Street vs. Main Street, taxpayers vs. the big bankers, I am sorry to say that the White House has come down on the wrong side,” Sanders said. “With growing support for this amendment from both the left and right, I hope that the administration reconsiders.”
The senator welcomed the new backing for the proposal championed by the unlikely pairing of Sanders in the Senate and Rep. Ron Paul (R-Texas) in the House of Representatives. Their legislation to audit the Fed is supported by a historically rare collection of advocates and academics from the left, the right and the mainstream of American government and politics.
On Friday, the AFL-CIO, leaders of the service employees and steelworkers unions, and an array of renowned economists lined up behind the amendment that Sanders will offer to the financial overhaul bill the Senate is considering.
The AFL-CIO threw organized labor’s backing behind the amendment in a letter to Sanders. “The Senate financial reform bill includes some positive measures to address the lack of transparency at the Federal Reserve, but much of the information regarding details of who received this financial assistance during the recent crisis will not have to be disclosed. Working people want to know who benefited from the liquidity provided by taxpayers during the crisis and this amendment will ensure that we receive that information,” wrote William Samuel, the AFL-CIO director of government affairs.
Another letter of support was signed by Andrew Stern, president of the Service Employees International Union; Leo W. Gerard, the United Steelworkers International president, Leo Hindery, Jr., of the New America Foundation; Robert Weissman, president of Public Citizen; Dean Baker, co-director of the Center for Economic and Policy Research; William Black, associate professor of economics and law at the University of Missouri-Kansas City; Professor James K. Galbraith of the University of Texas, Austin; author Nomi Prims, a senior fellow at Demos; Tyler Durden, founder of Zero Hedge; Gerald Epstein, professor of economics at the University of Massachusetts, Amherst; Thomas Ferguson, a political science professor at the University of Massachusetts, Boston, and a senior fellow at the Roosevelt Institute; Jane Hamsher of Firedoglake.com; Gary Kalman of U.S. PIRG; and L. Randall Wray, professor of economics at the University of Missouri-Kansas City.
“Since the start of the financial crisis, the Federal Reserve has dramatically changed its operating procedures. Instead of simply setting interest rates to influence macroeconomic conditions, it rapidly acquired a wide variety of private assets and extended massive secret bailouts to major financial institutions,” their letter stated.
Noting that the Federal Reserve balance sheet expanded to more than $2 trillion, along with implied and explicit backstops to Wall Street firms that could cost even more, the letter writers asked: “Who received the money? Against what collateral? On what terms and conditions? The only way to find out is through a complete audit of the Federal Reserve.”
Sanders’ amendment already was endorsed by a wide spectrum of public interest organizations ranging from the 250 organizations united under the umbrella organization Americans for Financial Reform to groups usually aligned with conservative causes, such as Americans for Tax Reform; the Campaign for Liberty; the Citizens Against Government Waste; the Rutherford Institute; the Eagle Forum, Freedomworks and others.
Both houses of Congress and two federal courts already are on record in favor of making the Fed disclose the identities of financial institutions that the central bank propped up with more than $2 trillion in hidden loans and guarantees after the economy collapsed in 2008.
Fed Chairman Ben Bernanke has repeatedly rebuffed requests from Sanders and others to name the loan recipients. The Fed also is fighting the federal court judgments ordering the central bank to divulge the information sought in Freedom of Information Act lawsuits by Bloomberg News and other news organizations.
The information that the Fed is withholding is separate from the $700 billion in Wall Street bailouts approved by Congress under the Troubled Asset Relief Program. Recipients of those funds were posted on the Treasury Department Web site.
“Let's be clear,” Sanders said. “This money does not belong to the Federal Reserve. It belongs to the American people, and the American people have a right to know where their taxpayer dollars are going.”