Government discovers corruption in the bailouts... Duuhh.

[Teancum-Old]

Great. So we finally get some of the inside scoop on the backroom deals and corruption (secret combinations) involving the Fed, Treasury Dept. and the banking industry during the bailout mania of the last few years. Highlights from this article on the Financial Crisis Inquiry Commission report below:

http://www.nytimes.com/2011/01/30/business/30gret.html

1. "With too-big-to-fail institutions now larger than ever, we are almost certain to go through another episode like 2008 in the not-too-distant future." -Some people are finally getting it.
2. "It is disturbing indeed that this institution, defiantly inert and uninterested in reining in the mortgage mania, received even greater regulatory powers under the Dodd-Frank law that was supposed to reform our system." (Of course, if we had no Fed to begin with, the mortgage mania could not have even begun)
3. "On Page 94 [of the report], we learn that from 2000 to 2006, [the Fed] referred a grand total of three institutions to prosecutors for possible fair-lending violations in mortgages." -The Fed was really enforcing good lending practices! And more: "For those of you who’ve wondered why there have been so few prosecutions of mortgage fraud during this epidemic, your answer is on Page 164. “The terrible thing that happened,” said William K. Black, a former fraud investigator in the savings-and-loan crisis who is a professor at the University of Missouri-Kansas City School of Law, “was that the F.B.I. got virtually no assistance from the regulators, the banking regulators and the thrift regulators.” - Shocking! The government regulators offer no assistance to the FBI!
4. "It is hard for a supervisor to challenge banks when they are highly profitable, other [Fed] officials said." Yeah, when the Fed's buddies are cashing in on their corruption, the Fed finds it tough to challenge them because they are profiting from it too!
5. "We already know, of course, that our government moved mountains to help the banks during the crisis. But the report adds to our understanding of events by describing how the Treasury Department changed the tax code to benefit banks acquiring weaker institutions. Never mind that the Constitution allows only Congress to write tax rules. " - A double shocker! Not only was the treasury was involved in the corruption (secret combinations) too but its actions are also in violation of our God-ordained Constitutional principle of separation of powers! Really?
6. "Do further bailouts lie ahead? Neil Barofsky, special inspector general for the Troubled Asset Relief Program, seems to think so. When the government stepped in to save Citigroup in 2008, “it did more than reassure troubled markets — it encouraged high-risk behavior by insulating risk-takers from the consequences of failure,” he said in his report to Congress last week.
“Unless and until an institution such as Citigroup is either broken up, so that it is no longer a threat to the financial system, or a structure is put in place to assure that it will be left to suffer the full consequences of its own folly,” he said, “the prospect of more bailouts will potentially fuel more bad behavior with potentially disastrous results.”

Ending the Fed would be a great way to stop all this corruption. But it is highly doubtful that we will ever End the Fed without massive societal convulsions.