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Federal Reserve: Same Old Sheriff on Wall St.

Pollin: Obama plan to 'empower' the Fed won't reign in casino capitalism; Fed should be democratized.

Washington, DC, June 26, 2009 --( In response to US President Barack Obama's comments on how to improve the transparency and accountability of the US financial markets, Robert Pollin tells TRNN's Jesse Freeston that imbuing the Federal Reserve with more regulatory control repeats a system that failed to prevent and detect financial crimes in the past.

"The problem is the Fed has already had an enormous amount of regulatory power, they just don't exercise that power. They didn't exercise that power," Pollin says. "What we need instead are things that shift the whole structure of the Fed, shift the whole regulatory environment."

At two separate House Financial Services Committee hearings earlier this year, Congressman Alan Grayson pursued answers from Fed Vice-Chairman Donald Kohn and Inspector General Elizabeth Coleman about the recipients of $1.2 trillion from the Fed balance sheet. Neither Kohn nor Coleman could give Grayson a clear answer.

On the September 18th, 2007 PBS NewsHour episode with Jim Lehrer, former Federal Reserve chairman, Alan Greenspan, said that the Fed was "an independent agency." He went on to say that there was "no other agency of government which can overrule actions that we take."

Pollin suggests instead of giving the Federal Reserve a greater regulatory role, the Fed should be held accountable directly to Americans through elections. "One idea would be to put the governors of the Federal Reserve up for democratic elections. That would force them to address the public's concerns; that those concerns would be on the table; they would be openly debated; and that would then open up the books of the activities of these institutions. That alone is not going to solve the problem of casino capitalism, but it would at least create a much enhanced level of accountability, and that's one starting point to start moving towards a responsible financial system."

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