WNYC's Bob Hennelly is an award-winning investigative journalist. While at WNYC he has reported on a wide gamut of major public policy questions ranging from immigration and homeland security to power outages and utility mergers.
Stucknation: Disclosure, Democracy, and the Federal Reserve
Monday, January 31, 2011 - 08:51 AM
In Tunisia, Wikileaks’ disclosures of State Department cables describing the self-dealing of former Tunisian President Zine al-Abidine Ben Ali's regime greased the skids for his exit. Sunlight may be a great antiseptic, but it is also a lubricant to move stuck history right along.
In a few days, the passion of the Tunisian Jasmine Revolution had swept across the Maghreb as far east as Egypt, touching down in Yemen and even the Sudan. The whole world watched as long-suffering people were inspired to put their life on the line to make their own history.
Nowhere has there been a greater need for Wikileaks than at the Federal Reserve. The Fed was created by an act of Congress in 1913 to regulate banking, but it has long been a captive of that industry.
As the Financial Crisis Inquiry Commission just reported, the Fed "was a pivotal failure" at stemming "the flow of toxic mortgages." Moreover, the report concludes the Federal Reserve "neglected" its mission "to ensure the safety and soundness of the nation's banking system" and to "protect the credit rights of consumers."
Last month, a push for Federal Reserve disclosure from Senator Bernie Sanders (I-VT) brought to light several trillion dollars in secret loans that the Fed doled out to the biggest banks, both US and foreign — at a time when millions of Americans looking for a mortgage modification were out of luck despite Obama administration promises.
In a speech on the Senate floor, Sanders pointed out the absurdity that the nation had so vigorously debated the merits of the $700 billion dollar TARP program to bail out the banks, only to have the Fed approve its own bailout plan for several trillion in secret.
And even now, the Financial Crisis Commission writes, "Our financial system is, in many respects, still unchanged from what existed on the eve of the crisis. Indeed, in the wake of the crisis, the US financial sector is now more concentrated than ever in the hands of a few large, systemically significant institutions."
And the crisis continues. The Financial Crisis Commission Inquiry found "the unchecked increase in the complexity of mortgages and securitizations has made it more difficult to solve problems in the mortgage market."
The panel found the lack of "transparency" has really reduced the ability of homeowners to get the mortgage modifications they need. "The resulting disputes and inaction have caused pain largely borne by individual homeowners and created further uncertainty about the health of the housing market and financial institutions," according to the Financial Crisis report.
Caught in the fiscal crossfire is a whole generation of children. The Financial Crisis Inquiry panel report cited a national survey of 2,200 school districts. "One third of the children who experienced homelessness after the financial crisis did so because of foreclosures of the housing that their parents owned or were renting," it reported.