Occupy the Fed
ttd#: the federal reserve bank . this is a movement back in new york. the fed, an agency that was formed 100 years ago by banks and continues to work for the preservation of the current banks to this very day. in fact, the federal reserve without any consent from us has pumped $8 trillion into the banking system during the financial crisis . $30 trillion at its peak revealed in the audit. our bills as a country in access of $61 trillion and all of this happening with a complete desert of investment in our own nation. down a trillion dollars bank lending over the past three years as we have given trillions to the banks . the 99% suffocate in that desert of investment. the 1% reap the harvesting of our wealth. joining us now, a leader in the occupy movement nomi prince, who was once an executive at gold man saks. give me a glimpse of the message of the protests, what is the point of highlighting this institution in this way?
>> the federal reserve has been, as you mentioned, historically the bank of the banks . but in no time in its history has been it been so militantly against the public and for the banks in the amount of money that it has flushed on to the financial system . and part of what the occupy movement is trying to show here relative to the fed is that there's a central, private entity that's funding the risk that these banks have taken. the rifbs that they have extracted from the american people . the foreclosures, the bad borrowing documents, the inability of small businesses to find loans. all of these are decisions made by this fed at the expense of our 99% in order to not just enrich, but enrich the top six banks or so who have become bigger and more powerful than in late 2008 .
>> peter, you have done a tremendous amount of work with us on the trade deficit in showing the consequences of the flows of money out of america and how difficult it is to create jobs when money is leaving. how consequential is that decline in lending? that trillion dollars in lending when you add it to the trade deficit ? and why is investing a precursor to prosperity?
>> it is really quite consequen consequential. if you're trying to compete with the chinese, there's the cost and availability of capital to expand. and to expand your business so that you can hire a worker, you need to add millions of dollars in new capital each time. the small businesses are the ones that create the jobs. they are the ones that can't get the loans. thanks to the policies we have had over the last couple years, most deposits have been concentrated in the hands of these six largest banks . they don't make main street loans. they take deposits from main street to new york where they gamble. they use them in the casino. not to the purpose of creating jobs, but to the purposes of enriching themselves.
>> and ari, how close are we to seeing this issue rise to the level of the presidential debate ?
>> i think what you have in the ron paul campaign is a candidate who has talked about the fed for a long time and really shows a really grass roots hunger for that on the republican side . i think, although some of his issues are controversial for other reasons that have nothing to do with economic policy , there's also a real fear of the ron paul momentum. the other question i have for nomi is the tarp spending got a lot of attention and was broadly well known. there was a debate, however, rushed, and then the money was discussed. but there was so much more that dylan highlighted with regard to all of the extra secret loans made at almost no interest whatsoever that were revealed through freedom of information requests and other reporting. in your work, do you have a sense on why that information was not available to the public? and any thoughts on that?
>> that's a great question, ari. i have reports on this from 2009 on my site. every month looking at the outflows from the federal reserve . not at the detail level that the freedom of information act suits have been able to extract, but at the magnitude level. there was $13 trillion worth of bailouts floating the banking system . net of that tarp money that was focused upon by the media. the reason it was focused upon is because it's the only aspect of the bailout that congress had the ability to vote upon. everything that happened through the fed and through the treasury department and everything that the fdic had to do because of the fed and the treasury department was the trillions of dollars that had no vote, that weren't brought up into the public forum until afterwards. and the media had a role in not showing that and not dig iging in as deep. bloomberg and this show and so forth aside. i think that's one of the issues. but the fact remains, there's $1.6 trillion of just access reserves doing nothing for the mainstream population. not going into infrastructure or jobs. just literally sitting there gaining interest at the fed, which was created at the bailout. that's one portion of what still remains and what's still a drain on the system of the main street public relative to the risk that was being mentioned before that has been blown up by the banking system . the banking system has more derivatives than before the bailouts begin. it's more risky and bigger. nothing is really standing in its way except here and there, ron paul and different people are looking at what the fed has been doing. but the pour that it has been able to have in creating this backstop to the risk that the banking system has created is still there. it's still way too acute for our nation.
>> what i'd like to ask though, is what the is remedy? how can we get the fed to use these reserves and induce the banking system and make the loans? you're a banker. you understand the mechanism. you're more than someone drawing attention to disparity. how do we get them to use the capital?
>> well, number one, you don't pay interest on the capital. so the .25% that's going into the reserves, is going back to the banking system just for having those reserves there, which was part of the stabilization act of 2008 . that has to be deleted immediately. this is happening in europe right now. so we have this global bailout economics that's sitting on money that should be used for its main populations. you have to take the interest out of it. you have to basically say you can't keep reserves. either back your own risk, we don't do it for you. we float it back to the system. the investors take their losses. the banks take their losses. that money instead of being put there in the case of emergencies for those institution, is put back into the public. if the fed were doing its job as an institution that helps the public, that would be going on. but it isn't. and that's the main problem. it's first to show what the fed is not doing to get the reserves into public use to take them away from backing the banks to not pay for them and then to divide up the banks into the commercial lending and deposits a sects where they go about their risk by themselves and the public is protected because it should be.
>> nomi, is there anything in dodd frank that you have seen that accomplishes or attempts to accomplish what you're describing?
>> unfortunately, dodd frank doesn't divide things. there's an aspect that deletes some private trading from banks , but they have ways on getting around it. i can get around anything in dodd frank. i guarantee you their lawyers and their people can get around it much quicker. unfortunately, there isn't, and there should be.
