Do We Really Need The Federal Reserve Bank?
By Harris Sherline
July 15, 2009
The actions of President Obama's administration sometimes seem that he is not aware of the legal limits of the executive branch of the federal government, that he just doesn't know any better, such as taking over major segments of American industry, spending the nation into financial oblivion, and taking actions in other matters that are clearly outside the scope of his authority. But then I am reminded that he is an attorney who taught law and, of course, he has the Justice Department as well as his own counsel to help evaluate his proposed policies.
So, assuming that he knows what he is doing, and given that he has plenty of highly qualified legal advice available to help him make judgments can only lead to one conclusion: that when his policies are legally or constitutionally questionable, he know it and doesn't care.
Following are just some of the actions the president has taken in the six months since his inauguration:
Taking control of AIG, the nation's largest insurance company,
Taking control of many of the nation's major banks,
Deciding who will be the officers and directors of major corporations,
Firing the CEO of General Motors,
Cutting Chrysler's advertising budget in half,
Taking controlling ownership positions in major American corporations, such as General Motors, and giving the Federal Reserve Bank unprecedented authority.
To the best of my knowledge, none of these were legal at the time they took place, and most of them were done without the consent of Congress.
However, the worst may be yet to come: Obama's announced intention to turn over the responsibility for supervising the nation's entire private sector to the Federal Reserve Bank, which many people believe is clearly unconstitutional.
Why? Because, for one thing, the Federal Reserve Bank is not a branch of the federal government. It is not even a federal agency. The District banks are private entities that are owned by the member banks. Furthermore, meetings of the Federal Reserve Board are not open to anyone, and they do not publish detailed minutes of their meetings, so the reasons for their actions are not generally available or accountable to anyone in authority, including the president of the United States or Congress.
Linda Chavez, noted in her article, Fed Rules: "The president's plan would turn an agency whose historic role has been to set monetary policy into a new superagency whose job it would be to oversee any institution that has the potential to adversely affect the overall economy, including large insurance companies, hedge funds and investment banks. But adding these new areas of regulatory oversight not only concentrates enormous power over the economy in a single body but would divert attention from the important monetary function the Fed now plays: namely, control of the nation's money supply...the administration's "blueprint" for reform lays out broad criteria that include an institution's size, leverage, and reliance on short-term funding; its role as a source of liquidity for the financial system; the impact a potential collapse might have on the financial system; and whether the institution was a source of credit to homeowners, businesses, and governments. The definitions provided by the administration are so broad they could include not just institutions like insurance giant American International Group, the investment firm Goldman Sachs, and other firms whose near collapse last year precipitated the financial crisis but virtually any large institution whose business model includes providing financing to just about anyone."
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