B-52 carries a heavy visage amidst the talk of an audit of the Federal Reserve.

Inside we have a short clip from TechTicker and Aaron Task who interviewed Congressman Alan Grayson yesterday about his very popular youtube video showing an extreme lack of oversight at the Federal Reserve. According to Grayson, that video has helped dramatically to convince certain Congressional members to demand more transparency from the Fed. He also discusses the status of H.R. 1207, Ron Paul's bill to audit the Federal Reserve.

Video is courtesy of TechTicker.

From Reuters:

One of the featured speakers at today's Big Picture conference (which was largely coordinated by TBM columnist Marion Maneker) was freshman Congressman Alan Grayson, who represents Orlando's district in Florida. Grayson is an interesting character; he came to prominence suing the government for military contracting fraud, which earned him this 2007 Vanity Fair profile. (He has since abandoned the beard.)

Grayson appeared on a panel with Nassim Taleb, best known as the author of The Black Swan. Their exchange about the proper role of government regulation of the financial system was entertaining, if a bit meandering. Grayson, who grew up in the Bronx and holds three Harvard degrees, has a rare ability to say relatively radical things without coming off as a rabid populist. Moderator Barry Ritholtz, author of the just-published Bailout Nation, asked a straightforward question: The U.S. government does a reasonably good job of regulating things like the safety of airplanes and foods. Why, then, does it do such a lousy job of regulating the financial system?

Grayson's answer was immediate and succinct: "Capture." For those not up on regulatory theory, this refers to the notion that regulators become captive of the industries they regulate. Noting that Fannie Mae and Freddie Mac spent $100 million on campaign contributions over the last 10 years, Grayson said: "The system is in some sense corrupt. A senator said the other day that Wall Street owns Washington, and while I might not go that far, you don't have the airlines ‘owning' the [airline regulators]. There is a lot of influence that Wall Street has on the government, even the judicial branch." Indeed, Grayson could have cited the front-page story in today's Wall Street Journal, documenting the remarkable efficiency with which banking campaign contributions appear to have helped ease accounting rules that in turn helped the banks.

Grayson even hinted that there are powers in Washington that would like him and the Financial Services Committee to trim their investigations somewhat. Referring to a hearing scheduled for this afternoon about how Fannie and Freddie went awry, Grayson said: "We're getting instructions from on high saying, ‘Don't dwell on the past.'" Taleb later remarked that while Grayson had laudable views about the proper role of government, he was almost certainly "a little lonely" in Washington.

But one of the most intriguing aspects of Grayson is how effectively he has been able to get his message out on YouTube, updating a tactic used by Republicans in the early ‘80s. When C-SPAN first came around, GOP rebels realized they could get great play by giving rabid speeches on the House floor in the middle of the night. It didn't matter if literally no one was listening to them in the chamber; cable would get the word out. Similarly, Grayson usually gets a couple of minutes in any given hearing to ask his questions, and he puts the video version out on YouTube, where he comes off as a crusader.



