Video - Grayson and Bernanke - July 22, 2009

Given the dollar free-for-all announced this week for European banks, this short clip helps explain how the liquidity swaps will work.

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Here's an update from Bloomberg...

Former prosecutor, Alan Grayson wants details on the $553 billion in foreign central bank liquidity swaps that were issued last Fall in response to the global financial crisis. These swaps grew from $24 billion at end of 2007 to $553 billion at the end of 2008.

Specifically, Grayson wants to know who got it, how much they got, whether it is constitutional, why Congress was not consulted, and whether these swaps contributed to the near 30% concomitant rise in the U.S. Dollar? From Bernanke's testimony this morning before the House Financial Services Committee, I have transcribed the following exchange:

Grayson: "What's that (the $553 billion)?"

B-52: "Those are swaps that were done with foreign central banks..."

Grayson: "So who got the money?"

B-52: "Financial institutions in Europe and other countries..."

Grayson: "Which ones?"

B-52: "I don't know."

Grayson: "Half a trillion dollars and you don't know who got the money?"

B-52: "Um, um, the loans go to the central banks and they then put them out to their institutions..."

Grayson: "Let's start with which central banks?"

B-52: "Well there's 14 of them...I'm sure they're listed in here somewhere."

Grayson: "Who actually made that decision to hand out half a trillion dollars?"

B-52: "The FOMC."

Grayson: "Under what legal authority?"

B-52: "Section 14 of the Federal Reserve Act..."

There's much more (I only transcribed a portion of the first 90 seconds).

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