Bernanke Asks For Nationalization "Framework," Graham Pushes Point

There are signs that the Obama administration and Congress are looking at taking their role in propping up the banking industry one step closer to nationalization. In particular, in his testimony in front of the Senate Budget Committee on Tuesday, Fed Chair Ben Bernanke, asked the Congress to put such a framework in place.

"I'd like to challenge the Congress to give us a framework where we can resolve multinational complicated financial conglomerate like Citigroup, like AIG, or others if that became necessary. We do not have that framework and therefore we must work within the constraints of what we have."

There has been a growing clamoring for the government to take over major banks that have been receiving government bailouts but are still teetering on collapse. Even Conservative Senator from South Carolina, Lindsey Graham, is taking up the issue.

While he has mentioned before he would consider nationalization, he reiterated the point during the Bernanke testimony.

Mentioning he had "parked his ideology" outside the Senate chambers, he said:

"When you look at amount of money we are putting into the banks and the amount of control we have over how much you get paid and what decisions you make we are pretty much running the damn thing..."

"...There may come a time, at least in my mind, where it would be better to take them over quickly and sell off the good parts and better manage the bad parts than it would be to continually capitalize. Does that make sense to you?"

Bernanke responded that indeed, it did, but "I reiterate that we do not have the tools to do that."

Calls to Graham's office were not immediately returned.

The above-quoted exchanges take place at minute 12:56 and 14:01

WATCH:

Comments

[joebhed]

It is not necessary for the taxpayers and the government to share the losses of $$TRILLIONS of dollars with AIG or BoA or Citicorps' partners and lenders.

This is not an FDIC-type bailout.
The FDIC has no "takeover" bank to whom the assets of AIG or Citibank can go.
The scale of the potential taxpayer losses from ANY of these could crush the future hopes and dreams of our grandchildren.

Today Bernanke told Congress that it needs to come up with a legal framework to make this "nationalization" thing happen.
The taxpayer-funded American Financial Rescue Workout Corporation is the body they need to carry out the 'nationalization" route.
Don't touch their mountains of poison assets.
Let the Financial Service bankcorps and their creditors work out their own asset write-down.

Rather than get into all this new debt, we need to make a structural change in the monetary system of this country.
That structural change is to separate the deposit-banking function of the money system from the credit-creation function of the system.
Deposit banking remains a completely private business.
Money creation reverts to the government.
We don"t borrow from anyone.

At the risk of getting progressive nuts a boiling, this was Milton Friedman's proposal that essentially supported FDR's Chicago Plan for monetary reform.
We MUST put the banks back to banking, as Volcker says.
We MUST put the American people back in control, and restore financial stability to the American economy.
It's OUR money.

[RTIII]

Bernanke is playing tricks on us; the FED is NOT a public institution! The FDIC _already_ has the power he claims the FED does not have - and he's right, and we should NOT give it to him!
.

[themodernleader]

About the Future of our Banking System: We should create a new National Bank that is run like the TVA. Self regulation and the Federal Reserve System are abject failures to protect our currency or our economy. At the least we must rid ourselves of the corrupt managers that have corrupted everything within their grasp.

[themodernleader]

Joebhed. You are right. Three criminal types are directing our financial redress that calls for the taxpayer to take responsibility for all the banking and insurance crooked transactions while these same institutions hold all the assets.
Senator Durbin told me that Obama would be a great President. And I trusted Durbin's judgement. Now it appears that President Obama's superordinary confidence is actually masked arrogance. Arrogance, no matter its form, is an Achilles heel to making wise decisions.
How a man could select managers who should be ostracised and indicted for crimes against the Republic, to direct the financial and economic destiny of this failing nation-state is beyond my comprehension. Unbounded confidence that has small basis in reality is actually the daydreaming of a child at play. I pray that Obama reads some of the criticism of his policies on this blog. He appears capable of changing. God help us that he has that capacity in management.

[TomInJax]

I say take them over, break them up into little pieces and sell them. When you have a handful of conglomerate banks controlling all of the cash and they fail... well here we are. Make a bunch smaller institutions that start competing again. Isn't it funny that the small community and regional banks are the most solvent.

[PhilipTaylor]

The FED is NOT an Agency owned by the Federal Government. It is owned by Elite Banks, Bankers, and the Wealthy due to a TRICK played on our government in 1913!

Normally Senator Lindsey Graham is the one of last men on earth I would agree with on any topic and especially Banking and AIG!

However, Graham said, "Don't underestimate how hard it is going to be for you (Bernanke) to continue to print money to solve this problem!"

Every dollar the FED prints we Taxpayers end up paying interest to the Elite FED owners so Bernanke is mortgaging our future and our CHILDREN's Future!

The FED should charge the government 0% interest on GOVERNMENT MONEY PRINTED by the FED!

Better yet make the FED a cabinet position under the President and take printing money out of the control of the Elite Banks!

[truthynesslover]

Without direct ownership of the fed by the government arent we just consolidating the banks under the control of the fed?

[Carolab]

Clearly, the new administration and the Democratic Congress do not plan to in any way challenge the fundamentally undemocratic and fatally compromised nature of the Fed, which is not a government agency, but a "quasi-public" system effectively owned and run by the banking industry itself. It's no surprise, then, that the Fed so often operates in the interests of the private banks, even when they run counter to the public interest—as it did under Greenspan, when its policies fueled, rather than reigned in, the credit bubble and accompanying fiscal disasters.

Reformers who want to democratize the Federal Reserve System have suggested bringing it inside the government, where it would at least be subject to some some oversight by elected officials. Some have proposed placing it under the control of the Secretary of the Treasury. Instead, Obama has done just the opposite: He's placed the Treasury Department under the power of a consummate member of the Fed inner circle who, like most of the system's leadership, has close ties to the private banks it serves.

It's impossible to imagine a Treasury Secretary with Geithner's background undertaking the kind of bold action to save the economy that was outlined by William Greider in the Nation last week. This is far from the free-for-all handout to big banks going on under Henry Paulson, with the support of many Democrats.

http://www.motherjones.com/mojo/2008/11/obamas-treasury-nominee-tim-geithner-yet-more-power-federal-reserve

[Carolab]

How to Fix It: Take the Fed Public

http://www.motherjones.com/politics/2008/09/how-fix-it-take-fed-public

[PhilipTaylor]

New lending program targets consumers, business
TALF program finally going into operation on March 25, Fed says

"The New York Fed will lend up to $200 billion to owners of high-rated asset-backed securities, such as those backed by consumer loans, auto loans, student loans, credit-card receivables or small-business loans. Investors or companies holding these loans will be able to use them as collateral to obtain fresh funding from the government to extend credit to new customers worth up to $1 trillion.

The Fed's program is designed to make a profit in the long run through interest and fees. To manage the growth in the Fed's balance sheet, the Fed and the Treasury will ask Congress for legislation to give the Fed additional powers."

?? How much additional Power does the FED Need?

If they ask for enough powers ALARMS are going to go OFF, and I hope the FED will be taken over by the Government!

http://www.marketwatch.com/news/story/New-lending-program-launched-consumers/story.aspx?guid=%7B2C3BCFDD%2DF2E4%2D446B%2DBDD2%2DFEF9BD5BDF8A%7D

[PhilipTaylor]

From your article:

"One option would be to make the bank part of the Treasury Department, a scheme that has been floated by various economists. Under such a plan, the Fed would be subject to congressional oversight and the heads of the regional Federal Reserve banks—who wield considerable power through the Federal Open Market Committee, which sets key interest rates—would become government appointees as well."

Kucinich Plan?

[RTIII]

As others have said, decades ago, echoing even today - in my own words as in others; Nationalize the Fed!
.

[GeoLee]

Well, in some ways it makes sense to have new management­...after all all those ivy league wall stret types who were supposed to be the experts have proved just the opposite is true. maybe we need some state college MBA's who have lived in the real world to be in top management. Starting with our first MBA CEO Bush, the whole group showed the failures of their educations at Harvard and Yale and hte likes...st­ating with the ethics classes they all apparently slept through.

[truthynesslover]

Bush was a failure BEFORE he became the govenor of texas.
He never succeeded at anything,even school,

[Robert Howard]

Of course , you do realize just why Obama has his SAT scores under lock and key don't you? We know Bush's SAT score - I believe it was in the 1200's . You will NEVER see Obama's SAT score - guess why !

[magibrotherhood]

b er n anke is fubar.

[themodernleader]

South Carolina Graham knows that he is a captured politician who has little room to manuever. Yet, once in a while he revolts and argues for policies that make sense, that is, supports the mission statement of the American Republic. But when he gets opposition he quickly pulls back into the uniform of seamless leadership of minions.
I have a hunch he has difficulty sleeping at night and seeing his State and Nation turn into a third world of thought and action. He was taught citizenship when he attended elementary school.

[magibrotherhood]

ben is setting up a quiet little coup d`tat-----watch all the chess moves he`s making....­....

[joebhed]

First thing to keep in mind is that it was Bernanke, Summers and Geithner that directly got us all into this mess.

Now that group is in charge of the most massive direct transfer of indebtedness in history from the private banking corporations to the American taxpayer, by orders of magnitude, the magnitude of which, by the way, is unknowable.

And they call it, taking them over, cause we're already there.
We might as well.
What the hell.

We sorta own them anyway because of actions taken by the FED and Treasury, so the story goes.
So, the taxpayers should assume control of the assets and LIABILITIES of the BANKCORPS.
This is necessary so that we can make the private, profit-making part healthy again.

Meantime, we the taxpayers take on the unknown quantity of poisoned assets and figure out what to DO with them, given that the government has all this experience in marketing toxic securities.
Yeah, that's a plan.

I think this is exactly what that master American capitalist Henry Ford had in mind when he said:
""It is well and good that the American people do not understand the money and banking system in this country, for if they did, there would be a Revolution in the morning"".­(emphasis mine)

[magibrotherhood]

yes---why in the world is the Government still the butt-kisser of the PRIVATE fed. reserve???? Dump ben and his global banking cartel.

[DonTampa58]

Fine Lindsey. Get Johnny Mac and all your Republican buddies on board with this. If we're gonna do this, we need to have some Republican skin in the game. A LOT of it.

[Firbolg]

I suggest we replace the Federal Reserve Board, now clearly a failure, with a Federal Rescue Board. The Rescue Board would be "private' in the same way as the Federal Reserve with a Government appointed CEO and/or President and carefully chosen board of directors and senior managers. The Rescue Board would purchase the bank's equity and use the shares as collateral for loans from the Treasury. It would set policy and sub-contract day-today management of the banks to the FDIC - who have the resources and management skills in-house and who could recruit unemployed financial services people to augment their staff as needed. The Treasury would receive interest on the loans and, hopefully, payback of the loans over time.

[magibrotherhood]

the fed reserve is a useless " middleman" here making obscene profits "lending" the U.S. what is essentialy their own money back to themselves-----

[nogimmicks]

It was interesting to witness today how Bernanke clearly does not represent the interests of the taxpayers. He behaved like a hostile witness. The FED represents ONLY the interests of the bank owners. Currently Obama's economic team is the opposite to what we need. They want the public to own bad assets only, they want to increase the national dept to increase the interest payments to the Fed banks, etc. And Geithner, Summers and Shapiro are in sync with Bernanke. Something must be done about this imbalance.

[magibrotherhood]

ben believes he`s the real president------he`s got the U.S. Government behind the 8-ball-----he`s always been hostile and arrogant toward the American citizens coz he works for the IMF

[dadw5boys]

GRAHAM IS HOPEING NATIONALIZING BANKS WILL COVER UP REPUBLICAN CRIMES !!