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 

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- 

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 

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 

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