More Gloomy Economic News; LIBOR Scandal, Too?
In testimony today before the Senate Banking Committee, Reuters reports that Federal Reserve chairman Ben "Bernanke told the Senate Banking Committee the economic recovery was being held back by anxiety over Europe's debt crisis and the path of U.S. fiscal policy, and he expressed unease over a stagnant jobs market," and "provided few concrete clues on whether the U.S. central bank was moving closer to a fresh round of monetary stimulus."
Reuters went on to report:
"Bernanke said the risks of a surge in inflation were low and that there was a modest risk of a broad-based decline in prices.
"He said Fed policymakers would consider a range of tools to further stimulate growth if it became clear the labor market was not improving or if deflation risks mounted.
"He cited the possibility of additional bond buying -- whether Treasury debt or mortgage-backed securities -- lending through the Fed's emergency loan window, and lowering the rate the Fed pays banks on reserves held at the central bank. The Fed could also use communications tools, such as extending its pledge to hold rates exceptionally low, Bernanke added.
"He said recent deterioration in the labor market suggests the nation's 8.2 percent jobless rate will come down all too gradually, saying for the first time the softness in hiring could not be explained away by purely seasonal factors."
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"Bernanke told lawmakers it was essential to find a way to avoid the "fiscal cliff" of sharp spending cuts and tax hikes that are scheduled to take place in the United States at the start of next year, warning it could tip the already weak economy into a recession."
Mike Flynn, reporting at Breitbart's Big Government, wrote, "The most unsettling part of his testimony to me was when he acknowledged that the Fed had known about the LIBOR bank scandal four years ago. For four years he knew that banks were manipulating one of the most important financial measurements and yet Bernanke did nothing." Flynn included this from the Economist:
"If attempts to manipulate LIBOR were successful—and the regulators think that Barclays did manage it, on occasion—then this would be the biggest securities fraud in history, affecting investors and borrowers around the world. That opens the door to litigation not just by the direct customers of implicated banks, but by anyone with a financial interest in LIBOR."
Flynn concluded his report for Breitbart by writing:
"What progressives continually fail to understand is that you can have 30 Dodd-Frank "reform" efforts, but if regulators are in at least tacit collusion with corrupt bankers, the entire regulatory edifice is pointless.
"The Obama Administration has known from day-one that some banks were manipulating a foundation of the financial system for their own benefit. And they did nothing."
Sounds like there will be a lot of clean-up work after the elections on Tuesday, November 6, 2012. If you're not registered to vote in Arlington County, check out the website of the Office of Voter Registration, or call them at (703) 228-3456.
UPDATE (7/17/12): Here is Bloomberg's report on what Bernanke said at the Senate Banking Committee hearings. It includes a news video that lasts just over one minute. In addition, Joel Gehrke reports at the Washington Examiner that "Sen. Chuck Schumer, D-N.Y., exhorted Federal Reserve Chairman Ben Bernanke to stimulate the economy before November through some form of quantitative easing or other monetary policy, which Bernanke said could create jobs." (HT to Drudge for both).