Statement by Gov. Rick Perry on Secret Federal Bank Loans

AUSTIN - Gov. Rick Perry today issued the following statement on today's news regarding the Federal Reserve's undisclosed bank loans:

"These outrageous secret federal loans to bailout big banks are why Americans are disgusted with business-as-usual Washington, the Federal Reserve and taxpayer-funded bailouts. The actions of Chairman Bernanke and Secretary Geithner have again proven that Washington insiders cannot be trusted to stop bailouts, protect taxpayers, or create jobs.  

"My economic reform plans seriously overhaul Washington, end federal bailouts and cut government spending, regulations and taxes to put American job creation and our economy on the right track."

ALG Condemns Senate for Confirming Bernanke to Second Term as Fed Chair

"In spite of objections that the Fed helped fuel the housing bubble with its loose dollar policies, and the fact that those policies continue to date, the Senate has voted to reconfirm one of the architects of the financial crisis that brought the U.S. economy to its knees." — ALG President Bill Wilson.

January 28^th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today condemned the U.S. Senate for voting to reconfirm Federal Reserve Chairman Ben Bernanke to a second term.

"In spite of objections that the Fed helped fuel the housing bubble with its loose dollar policies, and the fact that those policies continue to date, the Senate has voted to reconfirm one of the architects of the financial crisis that brought the U.S. economy to its knees," Wilson declared.

The vote on cloture was 77-23, and the final vote in favor of Bernanke was 70-30.  This is the most Nay votes against a nominee for Federal Reserve Chairman in U.S. history.

Wilson said that the Senate had passed on a "golden opportunity" to hold Bernanke accountable for his role in the financial crisis, "The Senate just voted to reconfirm the man who will not even acknowledge the role his own monetary policies played in causing the crisis."

"Several Senators on the floor did acknowledge the role that indeed was played by the Fed in the crisis, but then voted to reconfirm Bernanke anyway," Wilson added, saying "the odds for higher unemployment and inflation just greatly increased."

Wilson cited Stanford economist John Taylor, who in writing for the Wall Street Journal stated, "the simple observation that the Fed's target for the federal-funds interest rate was well below what the Taylor rule would call for in 2002-2005."

Taylor continued, "By this measure the interest rate was too low for too long, reducing borrowing costs and accelerating the housing boom. The deviation from the Taylor rule, which had characterized good monetary policy during the previous two decades, was the largest since the turbulent 1970s."

The current federal funds rate, the interest rate at which banks borrow from the Fed and lend to each other, is at 0 to .25 percent.  Wilson said that the rate "is still way too low."

"Bernanke to date does not share Taylor's views," said Wilson.  "He has blamed the crisis on regulatory changes needed at mortgage underwriters Fannie Mae and Freddie Mac.  That's only half the story."

"The money to make the home loans in the first place had to come from somewhere.  By keeping interest rates so low, the Fed accommodated the housing bubble on the way up," Wilson said. 

Wilson also laid blame at Bernanke, and his predecessor, Alan Greenspan's feet for the oil and commodities bubble of 2008, when oil reached nearly $150/barrel and gold topped $1,000/ounce.

The True Money Supply index recorded by the Ludwig Von Mises Institute found that the money supply rose from about $1.787 trillion at the end of 1990 to about $5.268 trillion by the end of 2007, representing a 295 percent increase. 

Mortgage debt grew even faster than the money supply. In 1990, outstanding mortgage debt held was $3.805 trillion. By the end of 2007, total mortgage holdings rose to $14.568 trillion, a 383 percent increase.

During the same period, gold rose from $386.20 an ounce to $695.39, a 180 percent increase, oil rose from $23.19 a barrel to $64.20, a 277 percent increase, and the national debt rose from $3.23 trillion to $9 trillion, a 278 percent increase. 

"There is little to no hope that Bernanke will do anything to prevent the next bubble from emerging and then popping, because he does not even accept the premise that the Federal Reserve did anything to inflate the housing bubble in the first place.  This all places upward pressure on unemployment, increases the likelihood of inflation, and could kill the dollar," Wilson concluded.

Since the financial crisis began in 2007, the Federal Reserve has more than doubled the money supply.

NetRight Daily: Bernanke Confirmed as Chairman of Fed.

Ben Bernanke was confirmed to a second term as Chairman of the Federal Reserve within the past hour. Here is the roll call vote to see how your Senator voted. Here are today's top stories on NetRight Nation and other relevant information:

Bernanke Confirmed As Chariman:  Ben Bernanke has been confirmed to a second term in a 70-30 vote in the Senate. Roll call vote coming soon (we'll post it as soon as we have it). According to Michelle Malkin, seven Sanators switched their votes after the Cloture vote.

Earth to Obama:  The American people simply do not matter to Barack Obama. He said so himself last night as he attempted his first State of the Union Address, declaring, "[W]hen I ran for president, I promised I wouldn't just do what was popular -- I would do what was necessary." This was a nice way of saying he had heard the overwhelming opposition to his Big Government agenda -- and he has decided to plow ahead anyway.

A Fond Farewell to Stuart Smalley:  Well, it has finally happened. We all knew was inevitable – but it still comes as a shock. Air America has closed its doors.

Obama's Golden Opportunities an Anchor for the Dollar:  President Obama has one opportunity born of this current economic crisis that he shouldn't waste; a crisis that could not have happened but for the mismanagement of monetary policy by the Fed and it's Chairman, Ben Bernanke. The President can right the fiasco that our modern day dalliance with a floating dollar has been. Now is the time to bring back the dollar's Golden anchor, and give Helicopter Ben his Golden Parachute.

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ALG Calls on Senate to Reject Bernanke Reconfirmation; Says Fed "Helped Cause the Crisis"

"For his failure to acknowledge one of the principal causes for the financial meltdown, and to take any responsibility whatsoever for his role in shaping the monetary policies that accommodated the housing bubble, Ben Bernanke must be rejected by the Senate." ALG President Bill Wilson.

January 27^th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today called upon the U.S. Senate to reject the confirmation of Federal Reserve Chairman Ben Bernanke to a second term, saying "the Fed with its easy money and loose credit policies throughout the 2000's accommodated the housing bubble that, when it popped, wrecked the economy."

Bernanke's cloture vote is scheduled for Thursday morning.  Wilson specifically urged members to vote "no" on cloture, saying "The best way to defeat Bernanke's reconfirmation is to vote 'no' on cloture."

Wilson said that Bernanke needed to be held accountable for his role in the financial crisis: "For his failure to acknowledge one of the principal causes for the financial meltdown, and to take any responsibility whatsoever for his role in shaping the monetary policies that accommodated the housing bubble, Ben Bernanke must be rejected by the Senate."

Wilson cited Stanford economist John Taylor, who in writing for the Wall Street Journal stated, "the simple observation that the Fed's target for the federal-funds interest rate was well below what the Taylor rule would call for in 2002-2005."

Taylor continued, "By this measure the interest rate was too low for too long, reducing borrowing costs and accelerating the housing boom. The deviation from the Taylor rule, which had characterized good monetary policy during the previous two decades, was the largest since the turbulent 1970s."

"Bernanke does not share this widely-accepted critique," said Wilson.  "He lays blame for the crisis at the feet of Fannie Mae and Freddie Mac for their roles in the sale of mortgage-backed securities all over the world."

"How can the Federal Reserve be expected to fulfill its mission of price stability and prevent another dangerous bubble if it will not even acknowledge what it did to inflate the last bubble?" Wilson asked, adding, "The Senate must consider the culpability of the Fed, which helped cause the crisis under Bernanke's watch."

Wilson said that "While it is fair to hold Fannie and Freddie accountable for the trillions of dollars of worthless securities they sold, what Bernanke fails to acknowledge is that the Fed's easy money policies incentivized the mortgage loans to be given in the first place through lower-than-called-for interest rates."

In a recent column on the topic, ALG Senior News Editor Robert Romano wrote, "The Fed's complicity in the crash of 2008 cannot be understated. The housing bubble was greatly accommodated by the Federal Reserve, which poured the necessary cash into the banking system through monetary easing and low interest rates throughout the 1990's and 2000's. The spigots were on—and the 'liquid' flowed into banks on a gargantuan level, much of it into home sales."

The article points to the True Money Supply index from the Ludwig Von Mises Institute which found that the money supply rose from about $1.787 trillion at the end of 1990 to about $5.268 trillion by the end of 2007, representing a 295 percent increase. 

Mortgage debt grew even faster than the money supply. In 1990, outstanding mortgage debt held was $3.805 trillion. By the end of 2007, total mortgage holdings rose to $14.568 trillion, a 383 percent increase.  Romano wrote that without the money from the Fed initially, the bubble would have been "impossible."

Wilson said that "In order prevent the next crisis, we need an accurate accounting from government officials as to what went wrong with the housing bubble, so that steps are taken to ensure that it never happens again.  We're not getting that from Ben Bernanke or the Federal Reserve at all under his leadership."

Wilson concluded, "For helping to cause the crisis and for failing to take responsibility for the errant Fed policies that contributed to it, Ben Bernanke must not be reconfirmed by the Senate."

NetRight Daily: Bernanke On the Hot Seat

The Bernanke Nomination:  The White House said yesterday it has damped down a political revolt against Ben Bernanke and now has the votes to secure the Federal Reserve Chairman's second four-year term. Whether or not Mr. Bernanke is confirmed, the lesson we draw is that overly political central bankers will eventually be undone by politics.

Time to Bring the Federal Reserve to Heel:  Sometime in the next ten days the U.S. Senate will vote on whether or not to give Ben Bernanke a second term as Chairman of the Federal Reserve. The only honorable and right thing to do is to reject his nomination.

The Myth of Blue Dog Democrats:  If, as the 2010 elections approach, the Democrats appear headed for a crushing defeat, expect to hear that Americans just 'want to throw the bums out.' But to write off voter disgust with out-of-control spending and the stinking backroom buyoffs to pass an unpopular health care bill as a generic anti-incumbency fashion statement clearly benefits the party in charge, that being the Democratic Party.

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