Saturday, November 7, 2009

Federal Reserve Extorting Banks?

by Maggie at Maggie's Notebook

The video below is Judge Andrew Napolitano and a panel discussing a new, developing story of the Federal Reserve extorting banks.

Napolitano was sitting for Glenn Beck this week. Here are a few quotes from his monologue leading into the panel:

The CEO of the Federal Reserve Bank of New York called the heads of New York's largest banks into the offices of his lower Manhattan offices.

We don't know precisely what was said but we do know that the head of the Fed told the assembled bankers that they must start cutting executive compensation, or the government will do it for them.

The government admits that it has no lawful authority to regulate compensation at banks that never received TARP funds or paid the funds back already.

So what was the extortion? Undoubtedly, it was a threat to have the FDIC audit the banks if they fail to tow the pay Czar's line. An FDIC audit will cost the banks tens of millions in employee loss of time and shareholder loss of value.

What is extortion? Extortion is a threat to perform a lawful act to influence the free will of someone else. Well, can the FDIC audit these banks? Yes. But may it do so to force executives to do what they have a lawful authority not to do? No.
The panel discussion on extortion is worth listening to. Napolitano asks: Can the federal government, constitutionally interfere with use of private funds and private freely negotiated contracts (when TARP money was NOT taken, when TARP money has been repaid)?

A reminder that Obama's tax-cheating Treasury Secretary is Timothy Geithner, who was the head of the Federal Reserve Bank of New York before moving to Treasury.

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