Inner City Press Federal Reserve Report - January 10, 2005

What’s missing here? In a speech to the American Economic Association in Philadelphia, Governor Bernanke intoned that "The challenge for bank supervisors is to ensure the safety and soundness of banking institutions -- that is, to minimize moral hazard and to protect the deposit insurance -- without inhibiting economically valuable activities or technological innovation by banks.”  What about consumer protection? Or even, anti-money laundering?

As the Federal Reserve considers PNC’s Riggs application, the following, from the Pittsburgh Post-Gazette of January 6, may be relevant: “PNC spokesman Brian Goerke and Riggs spokesman Mark Hendrix declined comment on a Washington Post report yesterday that Riggs was close to resolving its issues with the Justice Department, which is conducting a criminal probe of the bank.... Analysts had not heard of a pending Riggs settlement. But one said revelations that the bank had significant ties with the CIA increases the chances of such a settlement. The Wall Street Journal disclosed the relationship last week, citing U.S. officials and people familiar with the bank's operation.’ That changes the whole picture dramatically,’ said Dick Bove of Hoefer & Arnett. ‘If the government was in fact the reason this bank was doing a lot of the things it did, then the government is on the hook.’ The purported link between Riggs and the CIA sent Riggs shares up 7 percent on Friday.”

   Let’s get this straight: the stocks goes up on news of the CIA link?  Because it makes a bank-regulatory cover-up more likely? But the Federal Reserve Board, to which Inner City Press/Fair Finance Watch has timely commented on PNC-Riggs, should note: the judicial process against Pinochet in Chile is moving forward (click here for ICP’s update on this), so a cover-up here in El Norte may be for naught, even, embarrassing. 

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