Congress has told them not to do it. Ben Bernanke has said that they wouldn’t do it.
Guess what? They’re doing it anyway.
Yes, the group that is slowly going to bankrupt America, the Federal Reserve, is bailing out Europe.
If you thought the financial crisis of 2008 was bad, just wait.
The Wall Street Journal reports:
The Fed is using what is termed a “temporary U.S. dollar liquidity swap arrangement” with the European Central Bank (ECB). There are similar arrangements with the central banks of Canada, England, Switzerland and Japan. Simply put, the Fed trades or “swaps” dollars for euros. The Fed is compensated by payment of an interest rate (currently 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then lends the dollars to European banks of its choosing.
The Journal explains the reason for such secrecy:
Why are the Fed and the ECB doing this? The Fed could, after all, lend directly to U.S. branches of foreign banks. It did a great deal of lending to foreign banks under various special credit facilities in the aftermath of Lehman’s collapse in the fall of 2008. Or, the ECB could lend euros to banks and they could purchase dollars in foreign-exchange markets. The world is, after all, awash in dollars.
The two central banks are engaging in this roundabout procedure because each needs a fig leaf. The Fed was embarrassed by the revelations of its prior largess with foreign banks. It does not want the debt of foreign banks on its books. A currency swap with the ECB is not technically a loan.
Republican presidential contender Rep. Ron Paul, a vocal critic of the Federal Reserve, points out:
The Fed’s latest actions in cooperating with foreign central banks to undertake liquidity swaps of dollars for foreign currencies is another reason why Congress needs enhanced power to oversee and audit the Fed. Under current law Congress cannot examine these types of agreements. Those who would argue that auditing the Fed or these agreements with central banks harms the Fed’s independence should reevaluate the Fed’s supposed independence when the Fed bails out Europe so soon after President Obama promised US assistance in resolving the Euro crisis.
Once again the Fed’s covert actions underscore the problems associated with fiat money, as Paul observed: “Fiat money caused this European crisis and the financial crisis before it. More fiat money is not the cure. The global fiat currency system has proven itself a failure. We need real monetary reform. We need sound money.”
So, he said he wouldn’t do it, but Bernanke still felt that the United States had a vested interest in bailing out the European banks. He stated that he was “very concerned” about the situation in Europe.
Senator Orrin Hatch (R-Utah) recently said of Bernanke, “He did say if they can’t get their thing in order it could affect us. He said a collapse over there would be detrimental to us.”
Bernanke knew that a public bailout of Europe would cause an uproar, so he went about it in a very covert way.
What will it take, America, for us to end this? What will it take?
More in the video below.