http://www.bloomberg.com/…

Federal Reserve Chairman Ben S. Bernanke, seeking to allay renewed concerns over the health of the nation’s financial system, said the central bank may extend its emergency-loan program for investment banks into next year.

“The Federal Reserve is strongly committed” to financial stability and is “considering several options, including extending the duration of our facilities for primary dealers beyond year-end,” Bernanke said in a speech to a conference in Arlington, Virginia.

Woot! More inflation!

Bernanke also endorsed proposals to set up a federal liquidation process for a failing investment bank. The Treasury should “take a leading role in any such process” in consultation with regulators, he said. Such a resolution mechanism may help reduce concern that investors and dealers begin counting on Fed aid in case their bets go wrong.

So like enforcing the current bankruptcy laws? I somehow doubt it.

Fed officials are working with the Securities and Exchange Commission and securities dealers “to increase the firms’ capital and liquidity buffers,” Bernanke said.

More inflation!!

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told the same conference that he supported Fed and Treasury proposals for “policies, because of what happened, to take proper action if a large investment bank goes bankrupt.”

Of course he does. He, and the rest of Wall St., directly benefit from this intervention and inflation.

Without any liquidation procedure in place, the Fed in March decided to make a bridge loan to keep Bear Stearns out of bankruptcy. The central bank then agreed to take on $30 billion of hard-to-trade Bear Stearns assets to help secure its takeover by JPMorgan.

“The Federal Reserve in essence bought $30 billion of mortgage product from Bear Stearns; I want to remind people we bought $350 billion,” Dimon said today. “We don’t really think” the deal will end up costing taxpayers money, he also said.

I do. Anyone with a cursory understanding of economics could see that taxpayers will be both directly and indirectly paying for this. The indirect in terms of all the likely new regulations and powers the Fed will get on top of the inflation that will continue to destroy the middle class and poor are likely the greatest costs.

Congress should legislate “consolidated supervision” of investment banks and other big securities firms, with the unspecified regulator having authority over capital, liquidity holdings and risk management, Bernanke also said today.

The Fed should also get “explicit oversight authority” over payment and settlement systems, putting the it on a par with counterparts from around the world, Bernanke said.

U.S. central bankers will already play a part in setting capital cushions at securities firms under an agreement yesterday with the SEC. The two agencies will collaborate in determining “guidelines or rules concerning the capital, liquidity and funding” arrangements of investment banks, the accord said.

Because obviously planned economies have worked so damn well. They function like clockwork everywhere they have greater control. Right Ben?

Gabor Steingart reports from the Spiegel’s Washington DC bureau:

Humiliation for Mr. Dollar: Ben Bernanke, the chairman of the United States Federal Reserve Bank, faces a general investigation by the International Monetary Fund. Just one more example of the Fed losing its power.

The United States Federal Reserve Bank, or Fed, seems as much a part of America as Coca-Cola or Pizza Hut. But at least one difference has become apparent in recent days. While the pizza chain and soft-drink maker are likely to expand their scope of influence in the age of globalization, the US central bank is finding that its power is shrinking.

[snip parts explaining the doom and gloom of the current financial situation]

Under its bylaws, the IMF is charged with the supervision of the international monetary system. Roughly two-thirds of IMF members — but never the United States — have already endured this painful procedure.

For seven years, US President George W. Bush refused to allow the IMF to conduct its assessment. Even now, he has only given the IMF board his consent under one important condition. The review can begin in Bush’s last year in office, but it may not be completed until he has left the White House. This is bad news for the Fed chairman.

When the final report on the risks of the US financial system is released in 2010 — and it is likely to cause a stir internationally — only one of the people in positions of responsiblity today will still be in office: Ben Bernanke.

<sarcasm>Poor Ben.</sarcasm>  Reaction to the this article can be found on The Age (an Australian news website).  Liberty Maven discusses the dilemma in which the IMF puts Ron Paul supporters:

We are against the IMF and federal style regulation over markets at all levels, yet we painfully yearn for more transparency from the Federal Reserve. If we aren’t yearning for more transparency from the Fed we are advocating abolishing it outright.

So the question is then, do we support the IMF investigating the hated Federal Reserve because it conveniently supports our anti-Fed sentiments? Or are we truly and purely against the IMF and it’s authority to perform such investigations?

If there is any conspiricy it’s coming from those who try to make people like Peter Schiff and Ron Paul look like quacks. They ignore their warnings and when they are shown to be correct they berate them.

http://www.campaignforliberty.com/…

Ron Paul gave a speech on the House floor today condemning the “virtual war resolution” soon to be considered by the House of Representatives. This bill already has 208 co-sponsors, and will likely be voted on after the 4th of July holiday. A related bill is being worked on in the Senate, with 29 Cosponsors. Many of the cosponsors are Democrats. Who says the Democratic Party is the anti-war party? You can see the video of Dr. Paul speaking out forcefully against this resolution here, sadly to a nearly empty House chamber.

It is time for Americans to join together against this insanity. Please take the time to understand your representative’s position on this resolution, and let him or her know that the American people do not want another war. Below is an unofficial transcript of Dr. Paul’s speech:

Read More…

http://www.forbes.com/…

Remember when Ben Bernanke was a fan of a more transparent Fed, with bright lines on where inflation should be and how to get there?

“Inflation-targeting countries have achieved lower inflation rates and lower inflation expectation,” he wrote in his 1999 book Inflation Targeting: Lessons from the International Experience. “There is also evidence that the use of inflation targeting increases public understanding of monetary policy, improves policy-maker accountability, and provides a discipline-enhancing ‘nominal anchor’ for monetary policy.” In 2003 Bernanke said targeting in the 2% range seemed “the optimal long-run average inflation rate” for the U.S.

But since taking office, you’ll hear no such comments from the chairman. The reason? Reality. While the European Central bank’s primary concern is controlling inflation, the American Federal Reserve has the dual responsibility of maintaining both price stability and employment, making Bernanke’s job a tough one.

No one ever seems to look at those goals and ask why price stability is important and how exactly does what the Federal Reserve do which effects employment.

Read More…