Another chapter of Banksters and the “Regulators” That Love Them.

Yesterday Federal Reserve Chairman Bernanke testified before the House and Senate and, as is customary, avoided giving direct answers to direct questions. But while it is also customary for Bernanke to make questionable assertions (like there was no Housing Bubble) he went the extra mile yesterday in his dishonesty.

From Reuters:

Bernanke said the very notion of a monetary policy audit was misleading.

“The term ‘audit the Fed’ is deceptive. The public thinks that auditing means checking the books, looking at the financial statements, making sure that you’re not doing special deals, and that kind of thing. All of those things are (already) completely open,” he said.

That is a complete lie.

I am sure many of the news organizations that had to sue the Federal Reserve to get information on special deals would be quite confused by that statement.

So would Senator Sanders, Congressman Paul, fmr. Congressman Grayson and all the legislators that had to pass a bill before Bernanke would open the books.

To recap, if what Bernanke asserted about Fed special deals being “completely open” was true, why the lawsuits? Why the bi-partisan legislation forcing an audit?

From Bloomberg (after winning the lawsuit):

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.

Oh that “anyone” that included Congress.

Lawmakers knew none of this…

Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size…

“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”

The Left and the Right clearly do not agree on how to reform monetary policy but they can agree on the facts – and the fact is, as Mr. Bernanke well knows, the Federal Reserve does not have an open process let alone a “completely open” process as to how it operates and to whom it gives preferential treatment.

Luckily for Bernanke, he gives those secret loans to the people that buy Congress, otherwise his lying might get him into trouble.

Matt Taibbi has claimed Wall Street operates like the mafia, Eliot Spitzer claims the mafia learned from Wall Street. But given the economic system is now Neo-feudalism perhaps the corruption more resembles a royal soap opera with lots of naughty palace intrigue – and like the serfs of old we get to eat the fallout.

From Wall Street On Parade:

On May 10 of this year, Jamie Dimon, Chairman and CEO of JPMorgan, announced that billions of insured deposits at his bank had been invested in high risk derivatives and had sustained at least a $2 billion loss. The Department of Justice and FBI have commenced investigations. Dimon is expected to announce the current extent of those losses this Friday in an earnings conference call.

Following the May 10 announcement, there were numerous calls for Dimon to step down from the Board of Directors of the Federal Reserve Bank of New York. That organization is the primary regulator of the firm. There was widespread public outrage that the CEO of a bank had no business serving on the governing body of his regulator. (The New York Fed has a long history of such conflicts.)

Now it has emerged that not only was Dimon conflicted in his role on the New York Fed but the President and CEO of the New York Fed had an equally dubious conflict of interest.

The Federal Reserve doesn’t have “conflicts of interest” the Federal Reserve IS a conflict of interest. Allowing Wall Street to control the money supply may be the definition of conflict of interest and has now lead to two depressions.

William C. Dudley has been employed by the New York Fed since January 1, 2007, first heading up the powerful Markets Group. That Group manages the supply of bank reserves in the banking system according to the mandate of the Federal Open Market Committee (FOMC). On January 27, 2009, Dudley was elevated to President and CEO of the New York Fed. Financial disclosure forms for 2008 through 2010 show that Dudley’s wife, Ann Darby, was a former Vice President of JPMorgan and had holdings of more than $1,500,000 in deferred income accounts at the firm as well as between $250,000 to $500,000 in a 401(K) plan there.

In a letter dated January 22, 2009, authored by the New York Fed’s General Counsel, Thomas C. Baxter, Jr. and Deputy General Counsel, Michael Held, two financial waivers were sought for Dudley. One involved $1.45 million in Treasury Inflation Protected Securities (TIPS) and the other involved a small monthly pension of $124.38 that Dudley would receive from his previous employer, Goldman Sachs, at age 65. (Dudley’s financial disclosure forms show over $1 million in his Federal Reserve Retirement Thrift Plan, which seems an extraordinary sum for his 5-year tenure. It could be that he was permitted to roll over most of his Goldman pension into the Federal Reserve plan, explaining why his monthly Goldman benefit at age 65 is so small.)

Of course a former Goldman Sachs executive should be a regulator! And if thou doth will it shall a portion of the benefits flow to his good lady?