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Corker Asks Bernanke: 'What If The Fed Becomes Insolvent?'

'Name the too big to fail banks, Mr. Chairman.'

Good highlight video from last week.  Runs 2 minutes.

Bernanke is asked to name the banks whose failure could create systemic risk, and he whiffs, repeatedly.  Here's the solution from Dallas Fed President Richard Fisher.


After the hearing, Sen. Corker sent Bernanke the following letter regarding the fed's balance sheet, mark-to-market losses and potential insolvency.


Corker Letter to Bernanke


Mr. Chairman,

As you know, during your testimony before the Banking Committee today, I asked you about the payment of interest on excess reserves and the selling of bonds in your portfolio as the means to withdraw monetary support once the economy recovers. I made the argument that the Fed could be in a position where it would have to print money to pay interest on excess reserves and to sell securities at a loss. My exact quote was the following:

“You're getting ready, I guess, in a few years as you alluded to when interest rates rise to basically have to print money to sell securities at losses.”

But it seems that we had a miscommunication. In an effort to rectify this, I will ask these questions in a slightly different way:

If interest rates were to rise and your securities portfolio were marked to market, is it not possible that you could be rendered insolvent at least on a balance-sheet basis?  And if so, what kind of risk would that present?

What I would ultimately like to understand is the following: do we have a serious policy problem brewing here, or is this simply an optics problem about which we should not be concerned?

I look forward to your response.


Bob Corker



From Bloomberg last week:

Bernanke Could Lose Half A Trillion On Balance Sheet When Rates Rise



Here's the solution:

Why A Fed President Wants To Break Up The Banks



Photo by William Banzai7...

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Reader Comments (10)

This is not the clip that most people have seen. Another post coming later on Corker vs. Bernanke will have that exchange.
Feb 28, 2013 at 10:30 PM | Registered CommenterDailyBail
Bernanke completely avoided Corker's question. Why do we still have too-big-to-fail banks 3 years after Dodd-Frank. At least Richard Fisher tells the truth.

Feb 28, 2013 at 11:18 PM | Registered CommenterDailyBail
So the pack has wakened.

And their attacs ate futail and in the borderline of stuoidity
There is two fundamental issues regarding this current crisis, one is the Prinnting of aditional Money.
And the second, fraud/scams/what ever in the like of MBS(motrage backed. secs.), withch have underminded collaterasl everywhere, and now people dont know what the f... they have. Are it real or not, if I knew I was sitting on papers that has its fundament(the f... legitimazy) in order, what the f... do I then have, shittpaper, litlerary.

Printing money is and have always been the biggest and the absolute the shurest way of undermining your won marked, in faltion f.... its is name, and its basic economics.
Why do we have to repeat it all the f... time.

And I also belive the old men are aware of this, and the "thruth" is we all are going to pay for it, and it boils down to, why do WE pay for Theyr own faults, why Bailout them at all, it contradicst everything, and of course the Monpolic Corps, by their sice, is right now, they to depending to have this Cherade going.
Status Qou.

Thats the FeD main target. To ceep their freind(the robberBaron gang) aflout.

Mar 1, 2013 at 3:59 AM | Unregistered Commentermikael
What if the FED became insolvent?
Jct: That's as silly as a casino running out of chips.
Mar 1, 2013 at 5:55 AM | Unregistered CommenterKingofthePaupers
Ron Paul tried repeatedly during his 35 years in office to have Congress authorize an independent audit of the Federal Reserve, without success. This has less to do with some mysterious Jedi mind power Bernanke uses on lawmakers, and more to do with the fact everyone in Washington already knows the truth about the Fed- they're already broke. In fact, they never had any assets, other than some bogus mandate to "manage the economy" via interest rates and money supply. They probably have our nation's gold too, but to know for sure would require another audit that will never happen, over at Fort Knox. We're told that gold is a "barbarous relic" anyway, even while global central banks are feverishly buying every ounce possible.

So the better question from Mr. Corker should ask is, "What happens when people realize the Federal Reserve already is insolvent?"
Mar 1, 2013 at 9:22 AM | Unregistered Commenterh5mind
Happy budgetary apocalypse.
Mar 1, 2013 at 1:20 PM | Unregistered CommenterS. Gompers
Good one kingofthepaupers ROFL

(unfortunately though it's not too funny when you consider they can tax us more and the resulting inflation can turn us into the Weimar Republic)

It Is Impossible For The US To Default


In other news a MUST READ...

That Theft In The 2000s? Too Bad


The effect of this decision, which was 9-0, is that those who committed fraud prior to the financial crisis just got away with it, as the Statute of Limitations has basically run on the entire period.

Mar 1, 2013 at 3:43 PM | Unregistered CommenterLadyLiberty
I honest to God saw Tim Geithner in the close company of Richard Perle during the 1983 political campaign races. He was about 17 years old. That being said, the thought repeatedly crosses my mind; The behavior of Tim Geithner and The Bernanke measures up to expectations. And they are competent and doing their jobs well. And that job is to destroy the economy of these United States of America. Got it? Freemasonry & Skull and Bones / Perle / Geithner / The Fed / Rothschild bank central / LIBOR / Freemasonry & Skull and Bones / Perle / ...The mothership of everything nasty.

Just a hunch.
Mar 1, 2013 at 8:53 PM | Unregistered CommenterHoward T. Lewis III
The Fed Becomes Insolvent?' Surely you jest?
Only could happen if you cut power to their printing machine!
Mar 7, 2013 at 9:16 PM | Unregistered CommenterIt is I only
The Nazis in the White House Story: Part 39
Buddhist Obama Home Again To Thailand

The Nazis in the White House Story: Part 23
Nazi-infested FED Destroys America
Mar 7, 2013 at 11:39 PM | Unregistered CommenterJon Carlsonc

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