...Allowing banks to extend funds to their brokerage affiliates is in violation of Federal Reserve Act Section 23A.Section 23A of the Federal Reserve Act ( Act ), originally enacted as part of the Banking Act of 1933, is designed to prevent the misuse of a bank's resources through non-arm's-length transactions with its affiliates and to limit the ability of a bank to transfer its federal subsidy to its affiliates.Bernanke's willingness to break the law is in strict accordance with Fed Uncertainty Principle Corollary Number Four.The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it's easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking.Supposedly the Fed "will temporarily allow commercial banks to extend liquid funds to their brokerage affiliates for assets that would normally be accepted in tri-party repurchase agreements."
For starters I doubt it will be temporary. But the main point is the Fed is taking steps that it knows to be blatantly illegal....
Monday, September 15, 2008
Bernanke Violates Federal Reserve Act Section 23A
From Mish's Global Economic Trend Analysis: