LaRouche Says: Sanders Amendment To Audit the Fed Is a Timebomb for Geithner

May 8, 2010 (LPAC)—The compromise struck by Sen. Bernie Sanders (I-Vt.) with the Obama White House and Sen. Chris Dodd (D-Ct.), to modify his amendment on the auditing of the Federal Reserve, has created a problem for Treasury Secretary Tim Geithner that could soon end his career. While dropping the demand for annual audits, covering the Fed's lending practices, as well as the operations of the Federal Open Market Committee, the amendment mandates a one-time audit of the Fed's actions during the banking blow-out of 2008, particularly the actions by the New York Fed, then headed by Geithner. Under the compromise reached between Sanders and the White House, documents on the New York Fed's loans to the big Wall Street banks, which had been jealously guarded by the White House, will now be released to the public. According to one well-placed Washington, D.C. source, this was Sen. Sanders' primary goal all along.

When, as the Wall Street Journal characterizes it, "The Sanders forces were winning, and Majority Leader Reid was about to join them," the White House offered the compromise of one audit to Sanders. Sources report that White House Chief of Staff Rahm Emmanuel had been working around-the-clock to kill the Sanders amendment for the past two weeks. Now, the White House not only let it pass; they endorsed it. Co-sponsor Rep. Ron Paul (R-TX) expressed disappointment that it was watered down and called it a "sell-out," but the true dynamic outcome was another Obama defeat, in a Senate where some people are now being driven by reality. Had the bill passed over Obama's opposition, the spectacle of Obama vetoing the bill, in order to protect the Federal Reserve bail-outs, would have resulted.

Looking into the Federal Reserve's decisions in the 2008 meltdown raises the question, "How much did Geithner spend to bail out the worthless derivatives?" — a timebomb for Geithner, who was protecting Wall Street as head of the New York Fed, and who is doing the same thing now as Treasury Secretary.