|
Fed Snubs Any Public Review In Making Goldman and
Morgan Bank Holding Companies
Byline: Matthew Russell Lee of
Inner City Press in DC: News Analysis
WASHINGTON DC,
September 22 -- The Federal Reserve
has become so lawless that its moves are hardly reported or questioned
anymore.
On Sunday night the Fed by press release announced that it had approved
applications by Goldman Sachs and Morgan Stanley, all the better to
shovel
money to them. But to become a bank holding company is no small thing:
it
requires an application subject to public review, a public comment
period, the
ability to protest including on Community Reinvestment Act grounds.
As it did
in March when it allowed JPMorgan Chase to buy Bear Stearns without any
public
comment period (click here
for Inner City Press' story at the time) the Fed simply did this. But its
September 21 Goldman and Morgan press release does not
even cite any statute or regulation under
which it is waiving otherwise applicable law.
Prior to
the Gramm Leach Bliley Act which repealed the Depression-era Glass
Steagall
prohibition on mixing commercial and investment banking, the Fed could
not have
made Goldman or Morgan into bank holding companies. When the
prohibition was
repealed, it was said that applications would be considered on a case
by case
basis, with full public review. Now the Fed allows the biggest
investment banks
to step over the line, with no public comment.
Fed's Ben Bernanke: here take the money, laws to be
thrown out
The Fed is designing and
promoting a $700
billion bailout, extended over the weekend to include non-U.S.
financial institutions such as HSBC, Deutsche
Bank, Barclays, Royal Bank of Scotland, Credit Suisse, Nomura and
even Sovereign Wealth Funds.
Likewise,
the Fed simply says it is putting $85
billion into AIG, in exchange for a 79%
equity stake. Such a stake, including by a foreign government,
would require an
application to approval, subject to public comment.
But the Fed has said nothing about that, nor
about who will examine AIG's subprime lenders while they are controlled
the
government or Fed. Can you say, conflict
of interest?
Separately, did
the Fed discuss this with Henry Paulson, formerly the chief of Goldman
Sachs? When will he finally start recusing himself?
Footnote: the only pro-public
aspect of Sunday's announcement is that with Morgan Stanley being a
BHC, if Wachovia or another buys it, they would unless waived have to
apply to the Fed, subject to the CRA. Then again, the Fed has shown
that the law means nothing to it.
Watch this site, and this debate, mostly
about UN but also Sarah Palin.
* * *
These
reports are
usually also available through Google
News and on Lexis-Nexis.
Click
here
for a Reuters
AlertNet piece by this correspondent
about Uganda's Lord's Resistance Army. Click
here
for an earlier Reuters AlertNet piece about the Somali
National
Reconciliation Congress, and the UN's $200,000 contribution from an
undefined trust fund. Video
Analysis here
Feedback: Editorial
[at] innercitypress.com
UN Office: S-453A, UN, NY 10017
USA
Tel: 212-963-1439
Reporter's mobile (and
weekends):
718-716-3540
Other,
earlier Inner City Press are listed here, and some are available
in the ProQuest service, and now on Lexis-Nexis.
Copyright
2006-08 Inner City Press, Inc. To request
reprint or other permission, e-contact Editorial [at]
innercitypress.com -
|
