Buried on page 83 of the 89-page Report on Financial Regulatory Reform issued by the
U.S. Administration on June 17 is a recommendation that the new Financial Stability Board "strengthen" and "institutionalize"
its mandate to "promote global financial stability." Financial stability is a worthy goal, but the devil is in the details.
Some see the new agency, which is based in the Bank for International Settlements in Switzerland, as
the latest sinister development in a centuries-old consolidation of power by an international financial oligarchy.
When the G20 leaders met in London on April 2, 2009, they agreed to expand the powers of the old Financial Stability Forum
(FSF) into this new Financial Stability Board (FSB). The FSF was chaired by the General Manager of the Bank for International Settlements and was set up in 1999 to serve in a merely advisory capacity for the G7 (a group of
finance ministers formed from the seven major industrialized nations). The new FSB has been expanded to include all G20 members (19 nations plus the EU) and it has real teeth, imposing "obligations" and "commitments"
on its members. What is the FSB's mandate, what are its expanded powers, and who is in charge?
The Shadowy Financial Stability Board
An article in The London Guardian gives these details:
The secretariat is based at the Bank for
International Settlements' headquarters in Basel, Switzerland.
To the wary, this is not a comforting sign. The BIS
has a dark and controversial history. Prof. Carroll Quigley, Bill Clinton's mentor at Georgetown University, said in Tragedy
and Hope that the BIS was created to be the apex of "a world system of financial control
in private hands able to dominate the political system of each country and the economy of the world as a whole." The goal
was "[control] in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at
in frequent private meetings and conferences."
The Financial Stability Forum is chaired
by Mario Draghi, governor of the Bank of Italy.
Draghi was director general of the Italian treasury from 1991 to 2001, where he was responsible
for widespread privatization (sell-off of government holdings to private investors). From January 2002 to January 2006, he
was a partner at Goldman Sachs on Wall Street, another controversial player.
The regulator . . . will cooperate with
the IMF, the Washington-based body that monitors countries' financial health, lending funds if needed.
The IMF is an international banking organization that is also controversial. Joseph Stiglitz, former chief economist for the World Bank, charges it with ensnaring Third
World countries in a debt trap from which they cannot escape. Debtors
unable to pay are bound by "conditionalities" that include a forced sell-off of national assets to private investors in order
to service their loans.
What will the regulator oversee? All 'systemically
important' financial institutions, instruments and markets.
The term "systemically important" is not defined. Will it include such systemically
important institutions as national treasuries, and such systemically important markets as gold, oil and food?
The body will . . . act as a clearing house
for information-sharing and contingency planning for the benefit of its members.
In some contexts, information-sharing is called illegal collusion. Would the information-sharing
here include such things as secret agreements among central banks to buy or sell particular currencies, with the concomitant
power to support or collapse targeted local economies? Consider the short-selling of the Mexican peso by collusive action in 1995, the short-selling of Southeast Asian currencies in 1998,
and the collusion among central banks to support the U.S. dollar in July of last year -- good for the dollar and the big players
with inside information perhaps, but not so good for the small investors who reasonably bet on "market forces," bought gold
or foreign currencies, and lost their shirts.
To prevent another debt bubble, the new
body will recommend financial companies maintain provisions against credit losses and may impose constraints on borrowing.
What sort of constraints? The Basel Accords imposed by the BIS
have not generally worked out well. The first Basel Accord, issued in 1998, was blamed for inducing a depression in Japan from which that country has yet to recover; and the Second Basel Accord and its associated
mark-to-market rule have been blamed for bringing on the current credit crisis, from which the U.S. and the world have yet
to recover. These charges have been explored at length elsewhere.
The Amorphous 12 International Standards and Codes
Most troubling, perhaps, is this vague parenthetical reference in a press release issued by the BIS titled "Financial Stability Forum
Re-established as the Financial Stability Board":
As obligations of membership, member
countries and territories commit to . . . implement international financial standards (including the 12 key International
Standards and Codes) . . .
This is not just friendly advice from an advisory board. It is a commitment to comply,
so you would expect some detailed discussion concerning what those standards entail. However, a search of the major media
reveals virtually nothing. The 12 key International Standards and Codes are left undefined and undiscussed. The FSB website
lists them, but it is vague. The Standards and Codes cover broad areas that are apparently subject to modification as the
overseeing committees see fit. They include:
Money and financial policy transparency
Fiscal policy transparency
Data dissemination
Insolvency
Corporate
governance
Accounting
Auditing
Payment and settlement
Market integrity
Banking supervision
Securities regulation
Insurance
supervision
Take "fiscal policy transparency" as an example. The "Code of Good Practices on Fiscal
Transparency" was adopted by the IMF Interim Committee in 1998. The "synoptic description" says:
The code contains transparency requirements
to provide assurances to the public and to capital markets that a sufficiently complete picture of the structure and finances
of government is available so as to allow the soundness of fiscal policy to be reliably assessed.
We learn that members are required to provide a "picture of the structure and finances
of government" that is complete enough for an assessment of its "soundness" -- but an assessment by whom, and what if a government
fails the test? Is an unelected private committee based in the BIS allowed to evaluate
the "structure and function" of particular national governments and, if they are determined to have fiscal policies that are
not "sound," to impose "conditionalities" and "austerity measures" of the sort that the IMF is notorious for imposing on Third
World countries?
For three centuries, private international banking interests have brought governments
in line by blocking them from issuing their own currencies and requiring them to borrow banker-issued "banknotes" instead.
"Allow me to issue and control a nation's currency," Mayer Amschel Bauer Rothschild famously said in 1791, "and I care not
who makes its laws." The real rebellion of the American colonists in 1776, according to Benjamin Franklin, was against a foreign
master who forbade the colonists from issuing their own money and required that taxes be paid in gold. The colonists, not
having gold, had to borrow gold-backed banknotes from the British bankers instead. The catch was that the notes were created
on the "fractional reserve" system, allowing the bankers to issue up to ten times as many notes as they actually had gold,
essentially creating them out of thin air just as the colonists were doing. The result was not only to lock the colonists
into debt to foreign bankers but to propel the nation into a crippling depression. The colonists finally rebelled and reverted
to issuing their own currency. Funding a revolution against a major world power with money they printed themselves, they succeeded
in defeating their oppressors and winning their independence.
Political colonialism is now a thing of the past, but under the new FSB guidelines,
nations can still be held in feudalistic subservience to foreign masters. Consider this scenario: Like in the American colonies,
the new FSB rules precipitate a global depression the likes of which have never before been seen. XYZ country wakes up to
the fact that all of this is unnecessary -- that it could be creating its own money, freeing itself from the debt trap, rather than borrowing from bankers who create money
on computer screens and charge interest for the privilege of borrowing it. But this realization comes too late. The FSB has
ruled that for a government to issue money is an impermissible "merging of the public and private sectors" and an "unsound
banking practice" forbidden under the "12 Key International Standards and Codes." XYZ is forced into line. National sovereignty
has been abdicated to a private committee, with no say by the voters.
A Bloodless Coup?
Suspicious observers might say that this is how you pull off a private global dictatorship:
(1) create a global crisis; (2) appoint an "advisory body" to retain and maintain "stability"; and then (3) "formalize" the
advisory body as global regulator. By the time the people wake up to what has happened, it's too late. Marilyn Barnewall,
who was dubbed by Forbes Magazine the "dean of American private banking," wrote in an April 2009 article titled "What Happened to American Sovereignty at G-20?":
It seems the world's bankers have executed
a bloodless coup and now represent all of the people in the world. . . . President Obama agreed at the G20 meeting in London
to create an international board with authority to intervene in U.S.
corporations by dictating executive compensation and approving or disapproving business management decisions. Under the new
Financial Stability Board, the United States has only one
vote. In other words, the group will be largely controlled by European central bankers. My guess is, they will represent themselves,
not you and not me and certainly not America.
Adoption of the FSB was never voted on by the public, either individually or through
their legislators. The G20 Summit has been called "a New Bretton Woods," referring to agreements entered into in 1944 establishing
new rules for international trade. But Bretton Woods was put in place by Congressional Executive Agreement, requiring a majority
vote of the legislature; and it more properly should have been done by treaty, requiring a two-thirds vote of the Senate,
since it was an international agreement binding on the nation. The same should be mandated before imposing the will of the
BIS-based Financial Stability Board on the U.S.,
its banks and its businesses.
Even with a two-thirds Senate vote, before Congress gives its approval it should draft
legislation ensuring that the checks and balances imposed by our Constitution are built into the agreement. The legislatures
of the member nations could be required to elect a representative body to provide oversight and take corrective measures as
needed, with that body's representatives answerable to their national electorates. If we are to avoid abdicating our national
sovereignty to a private foreign banking elite, we need to insist on compliance with the constitutional and legal mandates
on which our country was founded.
Ellen Brown developed her research skills
as an attorney practicing civil litigation in Los Angeles. In Web of Debt,
her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows
how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it
back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven
books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to
Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com.
