X-Message-Number: 31753
Date: Fri, 19 Jun 2009 09:05:25 -0700 (PDT)
From: Phil Ossifur <>
Subject: Shut down the FED
Cryonicists who wish to maintain the value of the US Dollar should read the
following... and help us shut down the Federal Reserve before they shut down the
US dollar. --PhilO
78 Economics EIR June 19, 2009
EIR Economics
Congressional Hearings Show:
We Must Shut Down the Fed
by John Hoefle
June 19, 2009 EIR Economics 79
June 12aC”The Federal Reserve has always been, since
its inception in 1913, a creature of the Anglo-Dutch
Liberal system, an American version of the privately
controlled central banks which allow the financial oli-
garchy to dominate global finance and trade. Founded
by European financiers and their U.S.-based agents, the
Fed was imposed as a way of absorbing the U.S. into
the empire.
The FedaC s duplicitous role has been on public dis-
play since mid-2007, as it has thrown trillions of dollars
of public funds into the greatest swindle in history, the
so-called bailout of the U.S. financial system. Through
this bailout operation, the Fed and the U.S. Treasury
have pumped prodigious amounts of funds into U.S.
and foreign banks, insurance companies, hedge and pri-
vate equity funds, money-management funds, and other
parasites.
Through it all, it has been obvious that the Fed is
acting against the interests of the citizens of the United
States, but its ability to operate in secret has made it dif-
ficult for citizens to see inside its black box. Now,
thanks to hearings held by the House Committee on
Oversight and Government Reform, that veil has been
lifted a bit. The committee, headed by Rep. Edolphous
Towns (D-N.Y.), has released a number of e-mails
among high-level Fed officials regarding the takeover
of Merrill Lynch by Bank of America.
The e-mails show that the Fed is perpetrating a fraud
upon the American people, with the active complicity
of the U.S. Treasury, the Bush and Obama administra-
tions, and the Nancy Pelosi-led Democratic leadership
in Congress. It is past time to shut down the Fed, put it
into bankruptcy, return to the Constitution, and convene
a new Pecora Commission to investigate the corruption
which now dominates the U.S. economy.
Culture of Corruption
The e-mails reveal, in the words of Fed officials
themselves, a culture in which truth is routinely sacri-
ficed to maintain the perception of solvency in the bank-
ing system and the larger financial markets. Rather than
protecting the public from fraud, the Fed is helping,
and, when deemed necessary, coercing, bankrupt insti-
tutions to keep the truth hidden.
Exemplary is an e-mail written by Federal Reserve
Board governor Kevin Warsh to Fed chairman Ben Ber-
nanke, regarding the merger of Bank of America and
Merrill Lynch. Bank of America had hurriedly agreed
to take over Merrill Lynch last September, on the week-
end that Lehman Brothers collapsed, and AIG sought
its initial bailout.
Amid ongoing discussions of the weaknesses at
both banks, Warsh stated that, aC the key to our ultimate
determination will be market perceptions (that is, will
markets see problems beyond ML [Merrill Lynch], par-
ticularly given relatively low levels of tangible common
equity at parent).aC
Market perceptions! No mention of protecting the
public, or the depositors and shareholders of Bank of
America, no mention of following the law and basic
regulatory principles! No, the standard by which this
transaction would be judged, and supported by billions
of dollars of public funds, was its effect on market per-
ceptions. ThataC s not a regulatory agency; itaC s a whore-
house!
That culture of financial prostitution permeates the
e-mails and notes released by the Towns committee.
The Fed officials knew that Bank of America was al-
ready in trouble, and that having it take over Merrill
Lynch would only make matters worse, but their over-
riding concern was hiding the bankruptcy of the system,
and saving as much of the values of the derivatives and
related securities as possible. When Bank of America
CEO Ken Lewis suggested in December that he had
reservations about going through with the deal, both the
Fed and the Treasury leaned on him, even threatened
him, to go through with the merger.
To be clear, we are not defending Lewis and Bank of
AmericaaC”there are no innocent victims here. With or
without Merrill Lynch, Bank of America is bankrupt
and guilty of perpetrating a fraud upon the public. Both
sides are crooked. The merger should neither have been
considered nor permittedaC”both institutions should
have been shut down.
aC~Save the CanceraC
The e-mails reflect the understated nature of aC Fed-
speak.aC The Fed version of shouting aC Fire!aC would be
to observe that aC the ambient temperature seems to be
rising in a measurable fashion.aC In a Dec. 18, 2008 e-
mail, Tim Clark, a senior advisor in the FedaC s Division
of Banking Supervision and Regulation, warned that
the financial conditions at Bank of America aC have also
deteriorated recently,aC and noted that aC the firm is very
thinly capitalized.aC Clark said that the decline at Bank
of America aC appears to be driving losses at ML even as
they are portraying the losses at ML as being the prob-
lem here.aC So much for a aC strongaC Bank of America.
Merrill Lynch was also melting down, however.
aC Merrill is really scary and ugly,aC wrote Mac Alfriend,
senior vice president of banking supervision and regu-
lation at the Richmond Fed. Bank of AmericaaC s head-
quarters in Charlotte, N.C. is in the Richmond FedaC s
district.
When a nervous Lewis suggested to regulators in
December that Bank of America might invoke a aC mate-
rial adverse changeaC (MAC) clause to get out of the
Merrill deal, regulators responded by warning him that
such an action would have serious repercussions for
Lewis, his bank, and the financial system. The Fed and
Treasury threatened to remove Lewis and his board of
directors if Bank of America backed out. aC Fire BofA if
you do it, irresp. for the country,aC said Bank of America
chief financial officer Joe Price, in his notes on a con-
versation with Treasury Secretary Henry Paulson.
Bernanke declared that Bank of AmericaaC s threat to
invoke the MAC clause aC is not credible.aC aC The public
assertion of the claim, however,aC he wrote, aC would
likely cause the demise of ML in much the same fash-
ion as Lehman [Bros.]. This would cause significant
reputational consequences for BA, in the markets, with
the public, and with the regulators. . . . BA would look
very weak in the eyes of the market.aC
Bernanke also wrote that Lewis aC said now he fears
lawsuits from shareholders for NOT invoking the MAC
. . . [and] asked whether he could use as a defense that
the govt ordered him to proceed for systemic reasons.aC
To which Fed general counsel Scott Alvarez replied,
aC First, we did not order Lewis to go forward, we simply
explained our views on what the market reaction would
be and left the decision to him. Second, making hard
decisions is what he gets paid for . . . so we shouldnaC t
take him off the hook.aC
Alvarez added: aC I want to avoid the Fed being the
centerpiece of the litigation. . . . Once weaC re in litiga-
tion, all our documents become subject to discovery.aC
Shut It Down
Judging by the barest peek inside the Fed provided
by these e-mails, the Fed does indeed have reason to
fear discovery. Its officials have broken law after law,
stolen trillions of dollars from the taxpayers, and vi-
ciously abused the nation. The Fed has taken in huge
quantities of toxic waste as collateral for loans, and has
been aC printingaC money like it was free, which, to the
Fed, it is. The result is an institution that is both thor-
oughly corrupt and hopelessly bankrupt, yet Bernanke
has the temerity to appear before Congress to demand
that the government practice fiscal discipline!
Rather than give up our jobs, our health care, and
our nation, as these parasites demand, we should in-
stead declare that it is their system which is bankrupt,
assert our sovereignty, and put the banking system into
bankruptcy protection. ItaC s us or them, and we can beat
them.
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