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Alan Grayson accused the Fed of manipulating the stock market

by: MinistryOfTruth

Sun Nov 01, 2009 at 07:03:52 PST        
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( - promoted by buhdydharma )

Crossposted at Daily Kos

     Back in late September, Alan Grayson (Big D-FL08) grilled Federal Reserve General Counsel Scott Alvarez on whether or not the Federal Reserve has manipulated the stock and futures market. Since this hasn't been diaried and Sunday is a slow news day, I thought it would be fun to watch Alan Grayson in action in a bit of a flashback.

(UPDATE: Unfortunately and oddly, the video is no longer working for some strange reason. Good thing I transcribed it when I did. I am looking for another version of the same vide, so hang in there until I can find it

UPDATE 2: Found a second video. Hope you enjoy)

      Transcript and commentary below the fold.

MinistryOfTruth :: Alan Grayson accused the Fed of manipulating the stock market

Alan Grayson (Big D-FL08):      "Did the Federal Reserve ever try to manipulate the U.S. stock market?"

Federal Reserve General Counsel Scott Alvarez:     "No, sir, not that I'm aware of."

Grayson:      "Not that you're aware of, but, you're the attorney, right?"

Alvarez:     "That's right."

Grayson:      "So, you might not even know, right?"

Alvarez:     "I would expect to know if there were something like that being done. I am not aware of that at all."

Grayson:      "And if you did know you'd be bound by attorney/client priveledge and you wouldn't be able to tell us, right?"

Alvarez:     "Uhh, sir, if there were something the Federal Reserve were doing outside it's legal authority I would have an obligation to say something about that."

Grayson:      "Alright, so we agree that any participation by the Federal Reserve in the stock marhet or the futures market is outside the Federal Reserves legal authority, right?"

Alvarez:     "The Federal Reserve has some authoruty to regulate various aspects of markets and, uhh, participate in markets in certain ways, so, I think your question is too categorical,but . . . "

Grayson:      "I think not, actually. Why don't you answer it."

Alvarez:     "I don't know what, I don't know. Your question is so, uhm, overbroad, I don't know whhere to begin to answer it."

Grayson:      "I don't think it's that overbroad. I'd like you to tell me if whether it's in the Federal Reserve's legal authority to try to manipulate the stock market or the futures market."

Alvarez:     "Sir, I don't believe the Federal Reserve , uh, tries to manipulate the stock market."

Grayson:      "Tries? Tried."

Alvarez:     "No, sir."

Grayson:      "Do they?"

Alvarez:     "The Federal Reserve's, uh, obligation and what it does in monetary policy is try to influence interst rates, and in that way to, uh, maximize employment and to stabilize prices."

Grayson:      "Now, if in fact the Federal Reserve were trying to do that, or doing it, isn't thhat something that we'd want to know?"

Alvarez:     "And, to the extent that the Federal Reserve influences interest rates, it does make announcements of that decision immediately."

Grayson:      "That's not what I said."

Attempted answer by Mr. Alvarez cut short

Grayson:      "I said manipulate the stock market or the futures market, what do we want to know."

long pause

Grayson:     "Yes or no?"

Alvarez:      "Could you define what you mean by . . ."

Grayson:     "I think you know what I mean Mr. Alvarez. Now wouldn't it be very helpful to have a GAO (U.S. Government Accountability Office) audit on that subject? Wouldn't it?"

Alvarez:      "I don't know what it is that you are seeking to audit, sir."

Grayson:      "But I just said."

Alvarez:     "It would be helpful if you could . . . "

Grayson:      "So let's go on to something else. Does the Federal Reserve actually posess all the gold that is listed on their balance sheet? Do they actually posess it?""

Alvarez:     "Yes."

Grayson:      "Has that been audited by the GAO?"

Alvarez:     "Uh, I believe that is within the GAO's authority to audit, it's certainly something that our independant accountant is able to verify and does."

Grayson:      "So, if I go ahead and ask for GAO audit you won't oppose it, right?"

Alvarez:     "To auditing the presence of the Gold on the facility? I don't see any reason to object to that."

Grayson:      "Good. Now there's been all sorts of claims of insider trading and front-running by the people who execute the trades for the Federal Reserve in the market. By the way, who is that? Who actually executes the trades for the Federal Reserve in the markets?"

Alvarez:     "I haven't heard of any allegation of front running in the . . . "

Grayson:      "Well that's funny, because you're the General Counsel, so if anybody would know that you would think you would know about it."

Alvarez:     "The Federal Reserve Bank of New York is responsible for effecting the transactions and implementing monetary policy."

Grayson:      "Ok, so, then answer the question."

Alvarez:     "The Federal Reserve Bank of New York."

Grayson:      "That's your answer?"

Alvarez:     "You wanted to know who uh, implements the . . . "

Grayson:      "You have people sitting in seats at the Federal Reserve Bank actually executing those trades? You don't delegate that to anyone else?"

Alvarez:     "No, the Federal Reserve Bank of New York, of course, it's a process where there are several steps, the Federal Reserve Bank of New York executes transactions through primary dealers."

Grayson:      "AHA! Okay, who are the primary dealers?"

Alvarez:     "The list of primary dealers is on our website."

Grayson:      "Do you know any of them? Can you name a single one?"

Alvarez:     "Uh, uh, sure, JPMC."

Grayson:      "Go ahead. What?"

Alvarez:     "J.P. Morgan-Chase."

Grayson:      "Okay. Do you mind if we have a GAO audit to see whether there has been front running or insider trading by them? Do you mind? Is that okay with you?"

Alvarez:     "I'm not sure I have any decision making authority . . ."

Grayson:      "Well, you're the General Counsel. I want to know if you're not going to try and stop it."

Alvarez:     "The GAO, the GAO audits Government agencies, if you want an audit of a private sec, a private entity, I think that is something that Congress would have to change the authority of the GAO to allow."

Grayson:      "Alright, now let's say, you're right, that's what we're doing right here, by the way, lets say that the Federal Reserve gave a billion dollars to a very promising fledling institution called the Dick Cheney savings and loan, whose only asset is an un-numberbed Swiss bank account, don't you think it would be a good idea for the GAO to have the GAO have authority to look into that?"

Alvarez:     "So, under the GAO authority as written, a specif . . , a loan by the Federal Reserve to a specific entity, say, a particular bank as you've pointed out, would be subject to GOA audit, we don't oppose that."

Grayson:      "Alright, now, the Federal Reserve has given 1 Trillion dollars out, 1 Trillion dollars in the past twelve months, that's how much the increase in it's assets and liabilities in it's balance sheet has been. Who got the money? This, by the wqay, is a question that was sent to me by Beatrice Delgado. She just wants to know who got the money. Will you tell me?"

Alvarez:     "So, the, uh, most of the increase in our balance sheet has been the purchase of U.S. Government securities and the purchase of agency, uh, guaranteed securities in the open market from market participants broadly."

Grayson:      "And what about the rest . . . "

Chairman:     "The Gentleman's time has expired."

Grayson:      "Thank you, Mr. Chairman, but I really think we need answers to these question and the only way to get answers to these questions is to have the GAO audit the Federal Reserve. Thank you very much."

Chairman:      "I just want to make the point that if the Gentleman has more questions there will be an opportunity to submit them in writing, and that opportunity will be available. Uh, the Gentleman . . . "

    There is your AHA! moment. Did you even know that the Federal Reserve purchases securities on the open market? The fact that J.P. Morgan-Chase handles the Fed's transactions would put them and other firms who do business like this with the Fed in a prime position to front run the market, just as Mr. Grayson alleged. And why wouldn't they? It is not like Wall Street is above that sort of manipulation, hell, that's what they do for a living!

Ron Paul tells Bloomberg that Congressman Watt has just more or less killed the bill to audit the fed:

Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been "gutted" while moving toward a possible vote in the Democratic-controlled House.

The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today.

"There's nothing left, it's been gutted," he said in a telephone interview. "This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that."..

nakedcapitalism.com


Bold text added by the diarist.

    Say what you will about Ron Paul's history and ideology, but that should NOT be a strawman to be used to discredit the need to bring accountability and transparency to the Federal Reserve. You don't hate accountability and transparency, do you?

    The move to audit the Federal Reserve, embodied in H.R. 1207, is going to fail despite the 308 co-sponsors it has garnered, not because it is not a good idea, not because the Federal Resserve has clearly done no wrong, but for the same reasons that Health Care Reform has been watered down, and for the same reasons that many more sensible measures to come before Congress in the near future will be watered down or pushed aside. It is because many members of Congress are corrupt agents of the special interests, who sell their political souls and their constituents interests downn the river in return for the legalized bribes that we so non-chalantly call "campaign donations". I, for one, fullysupport the move to audit the Federal Reserve, and I hope that members of Congress who truly believe in fiscal responsibility do not give up on such a measure easily, as I believe that it iis vital to our nation's economic well being to have full accountability for both the un-democratic Federal Reserve that sets our nation's monetary policy and the broken banking system that they do dirty business with, as evidenced by Mr. Grayson's tough questions regarding the need for transparency, amny of which were avoided and then answered reluctantly by the Fed's General Counsel Mr. Alvarez.

    Obviously I am a bit of a fan of Alan Grayson's. I dig the unapologetic truth, and even though telling the truth can put you in an awkward position on occassion, it is better to be in an awkward position for telling the truth than for telling lies.

    Why is it that we do not see other members of Congress from the Democratic party asking these tough questions? I levae that question for you to answer for yourselves.

    I firmly believe that the only way to encourage more members of Congress to act in the interests of We The People is to reward the few who do. I think that is the best way to get BETTER Democrats elected to public office, as I believe that the current state of the health care debate is proof positive that MORE will only get you so far. In times like these BETTER is what we need more than anything else.

    Keep Alan Grayson in Congress for years to come by donating with ActBlue here

     I also think that everyone on both sides of the political spectrum would like to see more transparency at the Federal Reserve especially now that thee sordid state of our nation's financial affairs is obvious to all.

     I often say that I am a patriot first and a partisan second. I believe that should be true of EVERYONE who engages in the political arena. Country first is what we ALL sholuld believe in, not the fake country first that Sarah Palin espouses while she runs off to China to speak for a huge fee while bad-mouthing the President, not the fake country first we see on display at teabagger rallies, and certainly not the fake country first that is behind senseless acts of bipartisanship where it is all too obvious that both parties are working together against the interests of the average American citizen. I can not think of more than a few matters of national importance that are more vital to our nation's well being than that of the accountability of those who make our nation's monetary policy. The fact that we have to fight just to be able to bring some small amount of transparency to that institution speaks to just how far we have to go still in our battle to keep this Democracy one of The People, by The People and For The People, and not just for the few, the powerful and the special interests they serve.

    Though there are many, many questions still to ask, at least there is one man who isn't afraid to ask them. For that I am very grateful.

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     Also crossposted at The Progressive Electorate.com

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Ponies for Transparency and Accountability (4.00 / 13)
and for Alan Grayson (Big D-FL08)

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The object of persecution is persecution. The object of torture is torture. The object of power is power. Now do you begin to understand me?' - 1984


"All animals are equal, but some animals are more equal than others" (4.00 / 9)
Hmmm...the Federal Reserve Bank of New York?  Maybe, just maybe, Timothy Geithner might know just a little about their activities?  

Could the same House Committee call Geithner to testify?  Can you imagine Grayson asking the questions and Geithner providing the non-answers?  How fortunate for Geithner that Grayson wasn't part of the Senate Committee conducting his confiration hearings.

In reference to the subject line above, Orwell's predictions seem to become increasingly accurate with each passing day.  If we could locate his crystal ball, would we dare look to see what lies ahead?  


[ Parent ]
Orwell knew the British Empire and what they were capable of (4.00 / 8)
I dare say that if he were alive today 1984 would be more subtle and a LOT more bleak

The object of persecution is persecution. The object of torture is torture. The object of power is power. Now do you begin to understand me?' - 1984

[ Parent ]
Speaking of Geithner... (4.00 / 2)
Does anyone else think that Ken Osmond looked like a much younger version of Geithner in the following clip?  

Sorry, this video can't be embedded, but you can still see it by clicking onto this link. Osmond appears from about the 1:45 to 3:15 mark in the video.

Enjoy!


[ Parent ]
Tipped and Rec'd (4.00 / 5)
Here and there. Good morning. I see you are "bright eyed and bushy tailed". ;-)

"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

I recover easily (4.00 / 5)
and it helps that the Yanks won. Otherwise I would be grumpier than usual

: )

The object of persecution is persecution. The object of torture is torture. The object of power is power. Now do you begin to understand me?' - 1984


[ Parent ]
Thankd for the transcript... (4.00 / 10)
Mr Grayson needs to keep one eye over his shoulder and be careful of the planes he flies on, populist heroes have a tendency to have unfortunate accidents in this country. He's pushing some powerful buttons. I watched Tim Geithner on MTP this morning, what a shifty eyed weasel, would you buy a used country from this guy?

I know he's a wacko on most issues, but Ron Paul should be mentioned for his involvement in this issue also.

Great essay...tipped and recced.


There are some (4.00 / 8)
who would look at this issue with suspicion just because Mr. Paul supports it. Re this response to MoT

 The fact that Ron Paul supports this (0+ / 0-)

is enough to make me want to give it closer scrutiny.

It seems like it could be a stepping stone in his grand scheme to abolish the fed and put us back on the gold standard.



"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

[ Parent ]
What's ironic (4.00 / 6)
is that it was Alan Greenspan's Libertarianism that got us into the present financial disaster.   (see the piece I wrote on the Frontline doc)

You'd think Ron Paul might question his idealogy a bit, but no, he has the same Magical Thinking that libertarianism will somehow, yes magically, fix everything.



"Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before." -- Rahm Emanuel


[ Parent ]
Thus my update (4.00 / 10)
  Say what you will about Ron Paul's history and ideology, but that should NOT be a strawman to be used to discredit the need to bring accountability and transparency to the Federal Reserve. You don't hate accountability and transparency, do you?

Hehehehehe

: p

The object of persecution is persecution. The object of torture is torture. The object of power is power. Now do you begin to understand me?' - 1984


[ Parent ]
Very nice (4.00 / 5)
and oh so "subtle" ;-}

"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

[ Parent ]
Thanks for bringing... (4.00 / 4)
that to my attention TMC, but I agree with MoT's response to that particular comment. Ron Paul would definitely cause more harm than good with his radical views. I'm not so sure that going back on the gold standard would be that bad of a thing, no more fiat money, but I doubt there's enough gold in existance to cover it all.

[ Parent ]
Oh I agree with MoT (4.00 / 5)
but others would discount the validity of anything Paul supports just because he supports it not because it is a good or bad idea. Apparently Paul is also saying that the bill has been watered down to the point of being ineffective. I haven't really followed this too much but it is important that it be brought to the front burner. Grayson is doing the job that other so-called Democrats won't do.

"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

[ Parent ]
lazy bastards (4.00 / 6)
lol, like Im not!

but still... theres a diary trying to poll opinions re stay or get out of afghanistan...

How about another choice: (1+ / 0-)

I will wait to hear Obama's decision.

If he felt that he needed a lot of time and information to make the right decision, I just don't see how we bloggers think we can just vote in a poll and believe we know what the right answer is. If the answer is obvious, I think Obama would have decided in one meeting.

comment link

)

No justice, no peace.

[ Parent ]
You know... (3.00 / 3)
...Grayson is starting to bore me. I'm not sure exactly why, but it seems to have a little something to do with his new sacred cow status.

The truth is a relative thing, after all.

mbr + dv + woyg


Where do you think you are? (4.00 / 3)
Tang.com?

How can you be bored with a sacred cow?

;-)


[ Parent ]
Let me tell you a story (4.00 / 3)
It begins with a horde of orange-clad humorless liberals, and then...

Ah, not worth it. You know the ending already.

mbr + dv + woyg


[ Parent ]
I know it sucks (4.00 / 4)
But those are just pretending to be liberals, and they're not very good at it either. ;-)

This is a much more reasonable place.


[ Parent ]
"Liberal" and "reasonable" are relative terms. (4.00 / 7)
I thought you knew that mister.

I think what I'm really bored with is the lame binary anger everywhere. I'm tired of the false obamabot/purity bullshit. It's lame and immature and totally humorless, and it doesn't just come in shades of orange.

But whatever fluffs yer stuff I guess. Everyone's taking everything too damn seriously. I knew, I just knew this would happen when the Democrats came back into power. No one has any sense of fun anymore.

Oh well.

mbr + dv + woyg


[ Parent ]
Interesting examination happening (4.00 / 3)
[ Parent ]
Yeah, really (4.00 / 2)
"Is Rahm Emmanuel an asshole?"

"Do you think he is?"

"Does that matter?"

hee hee...

mbr + dv + woyg


[ Parent ]
...and never ever forget... (4.00 / 4)
...that we're talking about the place that waited 6 years before it put me on the rec list. :)

mbr + dv + woyg

[ Parent ]
Yeah well... (4.00 / 2)
And what would you have done with you if you were them? ;-)

[ Parent ]
Humored their ego and pushed a button (4.00 / 3)
I dunno. I've done it to so many other people, though...

mbr + dv + woyg

[ Parent ]
Cass (4.00 / 6)
makes some really good salient points. The discussion is pretty good, so far.

"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

[ Parent ]
Cass (4.00 / 3)
makes some really good salient points, very often!

[ Parent ]
The world is not black and white (4.00 / 7)
It is shades of gray, most mature, rational, thinking people know that

To an adult, the world is not binary.


"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

[ Parent ]
Yeah, I saw that one too (4.00 / 6)
My subtle adult sensibilities also prevent me from understanding things like "Where the Wild Things Are."

I wanted to like it, but I felt absolutely nothing after seeing it.

mbr + dv + woyg


[ Parent ]
I guess (4.00 / 5)
I am still a 'wild child". I loved it.

"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

[ Parent ]
Maybe you should cut back on (4.00 / 1)
the Paxil.

There.  How's that for a sense of humor.   At your expense.  :)

"Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before." -- Rahm Emanuel


[ Parent ]
It's not that (0.00 / 0)
It's the fact that I wanted to see some Wild Things but Spike Jonze and Dave Eggers and their stifling, hipper-than-thou ennui were standing in the way.

mbr + dv + woyg

[ Parent ]
Hah... (4.00 / 5)
Thanks for putting up that link MomCat...I hadn't seen that diary...it's a classic.

[ Parent ]
Turkana does some real classics (4.00 / 5)
like this exclusive which if your eating and drinking, stop before reading

I Admit it. I wish Cheney were president.

"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"


[ Parent ]
I did one of those, too (4.00 / 5)
Never got around to posting it here, though:

The Horrible Burden of Being Right All the Time.

mbr + dv + woyg


[ Parent ]
Where have I (4.00 / 4)
read the last paragraph before, then?

[ Parent ]
Oops (4.00 / 3)
It was a comment here originally. :)

mbr + dv + woyg

[ Parent ]
I thought it (4.00 / 3)
was familiar...

[ Parent ]
You should (4.00 / 5)
post it here. Turkana refrained from cross posting that assay at DK. I dared him. ;-)

"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

[ Parent ]
I need to make it appropriate for DD (4.00 / 5)
What sacred DD cows-I mean, ponies-can I topple? And how on earth can I do it without the help of a cute deaf girl?

mbr + dv + woyg

[ Parent ]
You'll think of something. (4.00 / 4)
We have faith in you. ;-)

[ Parent ]
Most of you do (4.00 / 3)
But there's just no pleasing some people.

mbr + dv + woyg

[ Parent ]
Aww, c'mon! (4.00 / 2)
We haven't burned you at the stake yet. ;-)

[ Parent ]
If I do that diary you want.... (4.00 / 3)
...and I do it properly, you may just do that.

mbr + dv + woyg

[ Parent ]
Well, that would (4.00 / 3)
be a hell of a sacrifice to make, but it would liven the place up, no?

Know of any live volcanos close by? ;-)


[ Parent ]
Just my hypersensitive ego (4.00 / 2)
It does tend to erupt unpredictably.

mbr + dv + woyg

[ Parent ]
Well, look (4.00 / 2)
What's the worst that we could do to you for hijacking a sacred cow, I mean MoT's essay, anyway?

You better post that essay before we wise up and maybe chase your ass all the way down the street around the corner and halfway across town here flinging hails of 1's and 0's at you! Fuck, we might even start double-clicking the post button while we're at it! ;-)


[ Parent ]
I'm not afraid of you (4.00 / 2)
I survived a 1 from Inky for being bored with Grayson.

mbr + dv + woyg

[ Parent ]
Don't make me mad. (4.00 / 5)
I'm telling ya. It could get ugly.



[ Parent ]
Oh god (4.00 / 1)
I fucking hate cat/pet pictures.

Uncle.

mbr + dv + woyg


[ Parent ]
That's me (4.00 / 1)
Determination of a winner, fer sure.

mbr + dv + woyg

[ Parent ]
You sir... (4.00 / 4)
are a wordsmith!

[ Parent ]
outstanding... (4.00 / 6)
So don't give me that bong-shattering bollocks about "nuh-uh" and "whatevs" and "nyah nyah  WE TOLD YOU SO" and "everything sucks worse than it's ever sucked before." We are HIGH on GLORY and TRANSCENDENCE right now, and shiny objects are for losers. Losers, I say. Now pass me that mojo and let's go bitch-slap some Naderites. Hell yes! Go! Fight! Stomp the buggers! Twist some progressive titties! Kick Sirota in the balls! The White House Chief of Staff didn't order it, but we know he totally would have, and you know what that means.

and right over their heads I'm sure.

All that campaign cash buys a lot of stupid.


[ Parent ]
Double Hah!!... (4.00 / 4)
Thanks MomCat...I take it he didn't cross post?...still laughin'.

[ Parent ]
oops... (4.00 / 4)
Didn't see the above comment until it was too late...

[ Parent ]
Ruh ro (4.00 / 4)
Turkana is taking a diarist on for his the right wing meme in a wreck listed diary. WOW....Rec Listed; Don't Let Reality Stop It

"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

Reality is boring (4.00 / 3)
Being based in reality is, well...boring-er?

mbr + dv + woyg

[ Parent ]
Being based in reality (4.00 / 4)
is scary. The reality is progressives aren't winning this battle and are likely to lose the war. The consequences are damned frightening for this country.

"By the pricking of my thumb, something wicked this way comes.", Wm. Shakespeare, "Macbeth"

[ Parent ]
reality is progressives have no representation (4.00 / 1)
and progressives don't want to realize that.

There's also the whole "wow, we fell for a bunch of bullshit" denial on the part of a LOT of people.



"Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before." -- Rahm Emanuel


[ Parent ]
Reform Immigration -
March for America
Sunday, March 21
 

March on Washington
Saturday, March 20
 

 

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