Systemic corruption at the Fed

The fact that the Federal Reserve is the primary culprit in the credit disaster that is the U.S. economy – the current credit demand gap is $30.2 trillion – is no secret to any regular reader of this blog. But the egregious way in which the Fed employees have blithely gone about breaking the law is a little startling:

That (ed: the public’s glazed-eye look when you speak of financial reform) may very well change today, for today — Friday, Sept. 26 — the radio program “This American Life” will air a jaw-dropping story about Wall Street regulation, and the public will have no trouble at all understanding it.

The Fed encourages its employees to keep their heads down, to obey their managers and to appease the banks. That is, bank regulators failed to do their jobs properly not because they lacked the tools but because they were discouraged from using them. For instance, in one meeting a Goldman employee expressed the view that “once clients are wealthy enough certain consumer laws don’t apply to them.” After that meeting, Segarra turned to a fellow Fed regulator and said how surprised she was by that statement — to which the regulator replied, “You didn’t hear that.”

The US economy is entirely corrupt and is run solely for the benefit of the bankers. This has always been the case, but it should have been entirely obvious to everyone after Ben Bernanke “rescued” the housing market by giving money to the banks rather than to the homeowners.

And Karl Denninger corrects the report, pointing out that bank regulators were not discouraged from using their regulatory tools, but were fired if they did their jobs and used them.