The Government Accountability Office has completed their audit of the Federal Reserve. Guess what the GAO found? Conflicts of Interest. It seems the Banksters are sitting on the Federal Reserve board, supervising their own institutions. The fox is guarding the hen house in other words. One of the most damning GAO discoveries is the timeline of Goldman Sachs turning into a holding bank and a Goldman Sachs board of directors, Stephen Friedman, also serving as the New York Federal Reserve chair. The below timeline and summary is from pages 34-35 of the GAO report:

During the end of 2008, the New York Fed approved an application from Goldman Sachs to become a bank holding company giving it access to cheap loans from the Federal Reserve. During this time period, Stephen Friedman, the Chairman of the New York Fed, sat on the Board of Directors of Goldman Sachs, and owned shares in Goldman's stock, something that was prohibited by the Federal Reserve's conflict of interest regulations. Mr. Friedman received a waiver from the Fed's conflict of interest rules in late 2008. This waiver was not publicly disclosed. After Mr. Friedman received this waiver, he continued to purchase stock in Goldman from October 2008 through January of 2009. According to the GAO, the Federal Reserve did not know that Mr. Friedman continued to purchases Goldman's stock after his waiver was granted.

In other words, you have a NY Fed Chair, helping make sure his company, Goldman Sachs, has access to cheap money, which will guarantee a strong profit for Goldman Sachs and buying more stock in Goldman Sachs. Why this is watered down as a conflict of interest, instead of a criminal offense is beyond comprehension. And there are more.

You know G.E. CEO Jeffrey Immelt, sitting at the White House, as a jobs czar, all the while promoting offshore outsourcing, more foreign guest workers to displace U.S. citizen workers? How G.E. CEO Immelt loves China as an offshore outsourcing manufacturing destination? Seems while Immelt was sitting as a New York Federal Reserve director, G.E. magically got a new cheap money program (p. 39).

The GAO found that the Federal Reserve Bank of New York consulted with General Electric on the creation of the Commercial Paper Funding Facility established during the financial crisis. The Fed later provided $16 billion in financing to General Electric under this emergency lending program. This occurred while Jeffrey Immelt, the CEO of General Electric, served as a director on the board of the Federal Reserve Bank of New York

Lest we not forget, JP Morgan Chase CEO Jamie Dimon also was a New York Federal Reserve board chair:

Jamie Dimon, the CEO of JP Morgan Chase, served on the board of the Federal Reserve Bank of New York at the same time that his bank received emergency loans from the Fed and while his bank was used by the Fed as a clearinghouse for the Fed's emergency lending programs(p. 40).

In March of 2008, the Fed provided JP Morgan Chase with $30 billion in financing to acquire Bear Stearns. During this time period, Jamie Dimon was successful in getting the Fed to provide JP Morgan Chase with an 18-month exemption from risk-based leverage and capital requirements. Dimon also convinced the Fed to take risky mortgage-related assets off of Bear Stearns balance sheet before JP Morgan Chase acquired this troubled investment bank (p. 86).

The JP Morgan Chase Bear Stearns acquisition is a prime example of privatize the profits and socialize the risks.

Senator Bernie Sanders, one of the sponsors of the original audit the Fed amendment in the Senate, published a damning GAO report analysis, which we reprint some of the bullet points below:

1. The affiliations of the Federal Reserve's board of directors with financial firms continue to pose "reputational risks" to the Federal Reserve System. (See page 32 of GAO report)
2. The policy of the Federal Reserve to give members of the banking industry the power to both elect and serve on the Federal Reserve's board of directors creates "an appearance of a conflict of interest." (See page 32 of GAO report)
3. The GAO identified 18 former and current members of the Federal Reserve's board affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis including General Electric, JP Morgan Chase, and Lehman Brothers. (See page 39 of GAO report)
4. There are no restrictions on directors of the Federal Reserve Board from communicating concerns about their respective banks to the staff of the Federal Reserve. (See page 36 of GAO report)
5. Many of the Federal Reserve's board of directors own stock or work directly for banks that are supervised and regulated by the Federal Reserve. These board members oversee the Federal Reserve's operations including salary and personnel decisions. (See page 41 of GAO report)
6. Under current regulations, Fed directors who are employed by the banking industry or own stock in financial institutions can participate in decisions involving how much interest to charge to financial institutions receiving Fed loans; and the approval or disapproval of Federal Reserve credit to healthy banks and banks in "hazardous" condition. (See pages 41-42 of GAO report)
7. The Federal Reserve does not publicly disclose its conflict of interest regulations or when it grants waivers to its conflict of interest regulations. (See page 47 and 49 of GAO report)
8. 21 members of the Federal Reserve's board of directors were involved in making personnel decisions in the division of supervision and regulation at the Fed. (See page 105 of GAO report)

Below is a Dylan Ratigan interview with Senator Sanders on the report results:

Oh yeah, the GAO also found the Fed is primarily a bunch of white guys. The GAO report starts with all sorts of demographic data and frankly, the point of the audit was to expose how the financial sector in the United States controls the Federal Reserve, it's an inside job and a circle jerk. The point is large Too Big To Fail financial institution executives are sitting on the boards of the very government organization which gives these same private financial institutions free money, sweat heart deals and on top of it, is a dumping ground for worthless toxic assets. Yeah, sure the Fed is a bunch of white guys with college degrees, MBAs in finance or whatever. Good God, we hope they have expertise in economics, banking and finance, which hopefully still does not imply corruption.

Why the GAO focused on outdated demographic data is beyond me, but it buries the real meat of the report and defocuses the purpose of the audit in my opinion. Since when does skin color guarantee representation of a minority group anyway, a prime example being President Obama with record black unemployment and a loss of black economic power going back to before civil rights? The GAO literally mistitled their report, Federal Reserve Bank Governance: Opportunities Exist to Broaden Director Recruitment Efforts and Increase Transparency. Bottom line, you can skip the first 25 pages of the report to get to the conflicts of interest. Senator Bernie Sanders has additional report analysis details, located here.