|credit: Alex Schaefer|
The GAO, Congress' investigative arm, recently completed its second audit of the Federal Reserve. Senator Bernie Sanders (I-VT) was responsible for the amendment to the Dodd-Frank bill allowing the GAO to audit the heretofore secret central bank, and has posted a summary of the GAO report on-line. The GAO found significant conflict of interests. GAO identified 18 former and current members of the Fed's board affiliated with banks and companies that received emergency loans during the financial crisis of 2008. The policy that allows the banking industry to elect and serve on the supposed independent Federal Reserve board creates in the circumspect phraseology of bureaucrats the "appearance of a conflict of interest". The reality is more than an appearance. Many of the directors work directly for supervised or regulated banks or own stock in them. They supervise the Federal Reserve's operations including personnel and salary decisions. They also decide how much interest to charge banks receiving loans from the Fed, and whether to extend credit to a bank at all.
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