Bernanke Says Federal Reserve Won't Reveal Details on Loans

Does this give you faith in the dollar?

Bernanke Says Federal Reserve Won't Reveal Details on Loans

By Steve Matthews and Craig Torres

Nov. 18 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the central bank won't disclose details of the $2 trillion in emergency loans of taxpayer funds because doing so would stigmatize banks needing the money.

``Some have asked us to reveal the names of the banks that are borrowing, how much they are borrowing, what collateral they are posting,'' Bernanke said today to the House Financial Services Committee. ``We think that's counterproductive.''

Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bank rescue plan. Two months later, as the Fed lends far more than that in separate lending programs that don't require lawmakers' approval, Bernanke said too much disclosure would harm the borrowers.

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.

``First, the success of this depends on banks being willing to come and borrow when they need short-term cash,'' Bernanke said in response to questioning from Representative Spencer Bachus of Alabama, the committee's senior Republican.

``There is a concern that if the name is put in the newspaper that such-and-such bank came to the Fed to borrow overnight for a perfectly good reason, that others might begin to worry is this bank creditworthy and that might create a stigma, a problem, and might cause banks to be unwilling to borrow, and that would be counterproductive.''

`Very Safe' Loans

Bernanke said the central bank would not lose money on its lending, which is backed by assets.

``We take collateral, we haircut it, it is a short-term loan, it is very safe, we have never lost a penny in these various lending programs,'' he said.

Before Sept. 14, the Fed accepted mostly top-rated government and asset-backed securities as collateral. After that date, the central bank widened standards to accept other kinds of securities, some with lower ratings. The Fed collects interest on all its loans.

At a Sept. 23 Senate Banking Committee hearing in Washington, Paulson called for transparency in the purchase of distressed assets.

``We need oversight,'' Paulson told lawmakers. ``We need protection. We need transparency. I want it. We all want it.''

At a joint House-Senate hearing the next day, Bernanke also stressed the importance of openness in the program. ``Transparency is a big issue,'' he said.

The Bloomberg lawsuit argues that the collateral lists ``are central to understanding and assessing the government's response to the most cataclysmic financial crisis in America since the Great Depression.''

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Video: Ron Paul questions Bernanke

Video: Ron Paul Questions Bernanke this morning...



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Consequences

Please review the important comments below from Jim Sinclair's website tonight. I agree with everything he says with the exception of his comments about silver. When Gold trades at $1,650 an ounce you will need a medium of exchange for smaller transaction amounts and silver fits the bill as it has since biblical times.

A 1/10th ounce gold coin is about the size of a dime and, at $1,650 an ounce, it will represent $165. Using today's gold/silver ratio of 84:1 a 1/10th ounce of silver would then be worth $2 - much more practical for day to day cash transactions. Imagine trying to break down a $165 1/10th ounce of gold! Anything smaller than a 1/10th ounce would be too small and too easy to lose.

From Jim Sinclair:

Dear Friends,

There is one simple but extremely dangerous error being made by the man who is the world's greatest expert on the time period and economics of the Great Depression, Dr. Bernanke, Chairman of the Federal Reserve.

The Chairman is an expert on the history and consequences of that period. He is being guided by this deep knowledge, yet is totally oblivious to the consequences of the alternative actions he is taking to not make the same errors as the 30s. This is all in his attempt to prevent his president from going down in history along with other failed economic leaders.

The unprecedented creation of infinite dollars for the purpose of flooding the world's entire financial system is causing the birth an inflation of types unknown in a modern economy.

The test case for the CONSEQUENCES of present united central bank actions is the history of the Weimar Republic, but this time it is on a planetary basis.

CONSEQUENCES cannot be avoided by any means. They are economic equal and opposing forces. That is simple fact.

In an attempt to avoid what the Chairman see as consequences of incorrect central bank action in the 1929 - 1933 period, he is creating new and infinitely more dangerous, longer lasting, society changing, politically provocative new sets of unexpected economic CONSEQUENCES.

The only number that might compare to the nominal value of all OTC derivatives is a count of all the individual plankton in all the oceans of the world and then only maybe.

The world will never be the same because of the greed of these 29 year olds and the old goat bosses who sat at the long desk of the board of directors while looking the other way.



Upcoming events:

As a result of "This is it and It is NOW":

1. US exchanges will be closed. There is a chance all world exchanges will close down. Only gold and currencies which are planetary markets will continue to trade.
2. Retirement programs will not pay off.
3. Medicare and Medicaid will at best buy you a bandage or pay for 1/4 of a visit to a free clinic.
4. Social security, due to the massive upcoming inflation, will provide no security for any society.
5. Money Market Funds will not pay off.
6. A CD is a gift, but not to you.
7. Unified central bank action has a short life.
8. Central banks will soon revert to the strategy of everyone for themselves.
9. 401Ks not self directed are headed for the toilet forever.
10. Exchange Traded Funds will not return the assets upon which it is based to you.
11. Sliver will demonstrate the fact that it is more industrial a metal than precious.
12. Silver is not a currency because it is simply too HEAVY to settle debts or to be universally fungible.
13. Silver performs best when there is reasonable industrial demand and distrust of currency. When this happens rounding up the gang and their money will have a lot to do with which party is elected.
14. Credit card companies are going to have to be bailed out.
15. GE Capital is a nuclear capable entity that has the capacity to take down the good old toaster and refrigerator manufacturer - SIGMA ZERO.
16. GE Capital is a huge OTC derivative dealer but somehow I do not recall that fact being discussed.
17. Gold is the only Honest Money because it has no liability attached to it.
18. Gold coins are the best way to own gold for the average investor.
19. When you select a junior gold, I would look for the highest quality, most bashed, highest short positioned, with real assets and real people devoid of pussy management. The situation is best if it is based in another country than the country you live in while doing business in a third and trading in multiple areas. The benefit is obvious.
20. Nobody ever did or will ever trade items as insurance. That is a form of madness.
21. At $1650 I will take my leave, having been with you to the point I promised.
22. The only place you will find me then is at my place of business on the ground or the web.

There is no question that gold will trade at or above $1650 by January 14th, 2011.

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