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.

Bank Nationalization Coming Soon?

During the Great Depression, then President Roosevelt never considered a move to nationalize the banks of the US. To stabilize the banking sector, he declared a bank holiday, passed strict regulations on the banking industry, and put people's trust back into the banks.

But President Obama doesn't see that. He is intent on destroying the banking system of the world in order to promote his socialist agenda.

Rumors of a plan to nationalize U.S. banks have fueled debate this week in Washington and on Wall Street over how far the Obama administration will go to rescue the financial industry, but lawmakers and economists are divided over whether such takeovers are likely or necessary.

The idea, however, is being raised by an unlikely mix of lawmakers, including Sen. Lindsey Graham, a conservative Republican from South Carolina.

"I'm very much afraid that any program to salvage the banks is going to require the government," he said on ABC's "This Week" last Sunday. "I would not take off the idea of the nationalizing the banks."

Joining Graham in talking up the idea this week -- and proving that politics can make for strange bedfellows -- were Senate Banking Committee Chairman Christopher Dodd and former Federal Reserve Chairman Alan Greenspan, who both said that banks may have to be temporarily nationalized to help lenders such as Citigroup and Bank of America survive.

"I don't welcome that at all, but I could see how it's possible it may happen," Dodd said on Bloomberg's "Political Capital with Al Hunt," to be broadcast this weekend. "I'm concerned we may end up having to do that, at least for a short time."

Greenspan told the Financial Times, "It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring. I understand that once in a hundred years this is what you do."

The stocks of Bank of America and Citigroup, which have received $90 billion in federal aid in the past four months, fell sharply Friday during mid-day trading, presumably on fears they may be nationalized, but they rebounded somewhat at the close after the White House insisted it's not trying to take over the two ailing financial institutions.

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This move doesn't surprise me one bit. It is just another step in the direction of true socialism and the destruction of a free economy.

It is time we let banks or businesses stand or fail on their own. The banks received $750 Billion dollars in bailouts, yet have not changed their way they do business. With expensive junkets for their boards, takeovers of more successful banks, overseas investment (specifically in China), and a general atmosphere that the government will just keep handing them more money, Banking officials are pulling the nation closer to the eventual government takeover of their industry.

No government in the world has successful been able to run any industry, any business with success. There is always mismanagement, and waste in their running of businesses. This was true under the Soviet Union, is true under Communism today, and will be true when Obama orders this.

Goodbye to the banking world. Hello to the new Communist world of the United States.