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Yellen opposes GOP proposal to boost Fed oversight

Discussion in 'Central Banking & Fed Reserve' started by REO 54, Nov 17, 2015.



  1. REO 54

    REO 54 Midas Member Midas Member

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    No shit Sherlock. If we had oversight and transparency about the Fed we would plainly see how Effed we are!

    Yellen opposes GOP proposal to boost Fed oversight
    Yellen opposes GOP proposal to boost Fed oversight
    Show Caption
    By MARTIN CRUTSINGER, AP Economics Writer Nov 17, 2015
    WASHINGTON (AP) - Federal Reserve Chair Janet Yellen said Tuesday that legislation supported by House Republicans to make the Federal Reserve more transparent and accountable would be a "grave mistake" that could harm the U.S. economy.

    Yellen said the proposal which could be voted on by the House this week is "significantly flawed" because it would require the Fed to use a mathematical rule in determining where to set interest rates. She said that approach is unworkable and would lead to "poor economic outcomes."

    The measure is supported by Republicans who want to increase congressional oversight of the Fed but is strongly opposed by Democrats.

    "The bill would severely impair the Federal Reserve's ability to carry out its congressional mandate and would be a grave mistake, detrimental to the economy and the American people," Yellen wrote in a letter to House Speaker Paul Ryan, R-Wisconsin, and Minority Leader Nancy Pelosi, D-California.

    But House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said the measure known as the Fed Oversight Reform and Modernization (FORM) Act was needed to deal with the enhanced powers the Fed has used to respond to the 2008 financial crisis and the deep recession that followed.

    "While the Fed's unusual monetary activities and power have increased, there has regrettably been no corresponding increase in its transparency and accountability," Hensarling said in reaction to Yellen's letter.

    The bill won approval by the House Financial Services Committee on July 29 on a party-line vote of 33-25. The House majority leader's office has announced it is on the schedule for a vote by the full House this week.

    The measure would require the Fed to use a formula to set interest rates but would allow the central bank to deviate from that strategy if economic conditions warranted a change.

    The Fed's chosen formula would be subject to a review by the Government Accountability Office, the auditing arm of Congress, and the GAO would also be required to audit the Fed any time the central bank chose to make changes to its rule.

    Yellen said had the Fed been required to comply with a policy rule over the past seven years when its key rate has been at a record low near zero, the unemployment rate would have been "substantially more painful than it already was" and inflation would be even farther from the Fed's 2 percent goal.

    "Millions of American would have suffered unnecessary spells of joblessness over this period, generating enormous amounts of personal and collective damage that could have been avoided - and, in fact, was avoided because we had the latitude to use our available tools responsibly and forcefully," she said.

    The GOP legislation would also require the Fed to be more transparent about the stress tests it requires the country's biggest banks to pass each year. It would also place new restrictions on the Fed's ability to make emergency loans during periods of financial crisis.

    http://www.komonews.com/news/busine...oversight-351123781.html?mobile=y&clmob=y&c=n
     
  2. FunnyMoney

    FunnyMoney Silver Member Silver Miner

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    No where in there did I see it say that the owners of the Fed would have their salaries and compensation packages audited. In addition to that there is insider trading and market manipulation which directly benefits the owners of every Central Bank on the planet. All this without even touching on the fact that this thievery has been going on for a century at least. It's impossible to force any kind of restitution at this point.

    I found an interesting article and quote, take a look:

    more at the link: http://www.federalbudget.com/fed.html
     
    REO 54 and viking like this.
  3. REO 54

    REO 54 Midas Member Midas Member

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    Tue Nov 17, 2015 5:50pm EST
    Prudential's Peters uses barbell as rate hike looms
    NEW YORK | BY JONATHAN STEMPEL AND ROSS KERBER

    Gregory Peters, who helps manage more than $565 billion of assets at Prudential Fixed Income (PRU.N), said he is favoring investment-grade financial sector bonds and higher-quality junk bonds, as the Federal Reserve prepares to end its long tease of the markets and raise benchmark interest rates.

    Speaking on Tuesday at the Reuters Global Investment Outlook Summit in New York, Peters said a rising rate cycle "is when you want to start buying bonds," and said he feels "really good about fixed income over the slightly longer term."

    Peters, a senior investment officer who runs the Prudential Total Return Bond Fund (PDBAX.O), forecast at last year's Summit that the Fed might wait until late this year or even 2016 to raise rates for the first time since June 2006.

    He now sees an 80 percent chance of a December rate hike, after the central bank made a "policy mistake" by doing nothing in September. Peters said subsequent statements by Fed officials may have been intended to help markets price in an eventual hike, even as small as 0.25 percentage point.

    "That overhang is more detrimental," he said, referring to the unfulfilled threat of raising rates. "It's like being a kid: When you're constantly being threatened, the punishment ultimately doesn't work that well."

    Peters has been emphasizing bonds from different parts of the credit spectrum, in a sort of barbell strategy, combining higher- and lower-risk assets.

    He said he likes banks such as Citigroup Inc (C.N) and Barclays Plc (BARC.L), sometimes dropping down the capital structure to buy preferred securities for their extra yield.

    Peters also favors short-term, "double-B" rated bonds, saying some junk-rated companies are "paradoxically" managing themselves more conservatively than their investment-grade counterparts, especially in the industrial sector.

    "Spreads have moved on the investment-grade side in a meaningful way," he said. "At the same time, leverage is the highest I've ever seen going into a down cycle. So I really worry about what happens to these companies with the stock of debt growing so meaningfully."

    Peters also said he is "quite negative" on energy companies, which have suffered from excess debt and capacity, and falling oil prices that he said could fall to $35 a barrel in 2016 from about $41 now, and more than $100 as recently as July 2014.

    "There's no catalyst to move them higher," he said. "A lot of these companies are not going to go away gracefully necessarily, and so the capacity kind of remains high as well. I think this is a longer-term problem."

    On the other hand, Peters said he remained "very positive" on structured securities, including high-quality collateralized loan obligations.

    The economy, Peters said, should weather a rate hike, if there is one.

    "It's not like 25 basis points is going to disallow (consumers) from getting a cheap mortgage," he said. "It's rare that you see us entering a recession without consumer confidence rolling over first, and we're not even close to that."

    Peters nonetheless said the Fed has appeared "wishy-washy" about its commitment to raising rates and can use December's meeting to make its intentions, including for 2016, clear.

    "I worry about them more trying to convince the market it's going to hike, and then they don't," he said.

    Follow Reuters Summits on Twitter @Reuters_Summits

    (Reporting by Jonathan Stempel and Ross Kerber in New York; Editing by Steve Orlofsky and Alan Crosby)


    Read more at Reutershttp://www.reuters.com/article/2015/11/17/us-investing-peters-idUSKCN0T62LJ20151117#CKRGt2mgwIlCH8GH.99
     

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