What Ron Paul Knows That Ben Bernanke Does Not

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Ron Paul recently raised questions during Congressional testimony with Fed Chairman Ben Bernanke about possible Federal Reserve misdeeds including allegations of involvement in Watergate payoffs and billion dollar payments to Saddam Hussein.

Bernanke answered smugly: “These specific allegations you’ve made, I think are absolutely bizarre,” while Barney Frank promised to look into the allegations.

Robert Wenzel from EconomicPolicyJournal.com fills out why Mr. Bernanke should apologize to Dr. Paul:

Fed chairman Bernanke simply doesn’t know Fed history as well as Ron Paul (Or the history conveniently slipped his memory). As far as Watergate, I always thought it was pretty common knowledge that the money ended up in the burglars’ hands through some pretty fishy means. Even wikipedia has part of the story:

[Watergate burglar Bernard] Barker had attempted to disguise the origin of the funds by depositing the donors’ checks into bank accounts which (though controlled by him), were located in banks outside of the United States. What Barker, Liddy, and Sloan did not know was that the complete record of all such transactions are held, after the funds cleared, for roughly six months. Barker’s use of foreign banks to deposit checks and withdraw the funds via cashier’s checks and money orders in April and May 1972 guaranteed that the banks would keep the entire transaction record at least until October and November 1972.

Wikipedia, also states:

Investigative examination of the bank records of a Miami company run byWatergate burglar Bernard Barker revealed that an account controlled by him personally had deposited, and had transferred to it (through the Federal Reserve Check Clearing System) the funds from these financial instruments.

Clearly, there were some very, very odd transactions that went down which may, or may not, have been abnormally facilitated by the Fed. Was this a normal Fed wire, or something more convoluted? My sense has always been that there was something a bit extraordinary about the way the funds went through the Fed system. It does smell, for sure, and to ask about it is not bizarre. It should be noted that the Fed chairman at the time was Arthur Burns, who would have sold his own children to a white slave ring if Nixon had asked. (In a recent report by Micahel Labeit, here at EconominPolicyJournal.com, Labeit details the speech of former Columbia University PhD student Walter Block, who during the speech reminisced about his years studying at the school , Block specifically recalled how Arthur Burns in his class, instead of teaching, simply told stories of his dinners with Nixon.) Note, I don’t think Nixon, himself, necessarily asked Burns to help in the transfer of the funds, but Burns would very likely have responded positively to a request from a Nixon lieutenant, given his adoration of Nixon.

Here’s the late investigative reporter Sherman Skolnick reporting on the documents the Fed blocked Congress from seeing about its possible involvement with money sent to Hussein:

….in October, 1990, at the time of the Persian Gulf conflict, there was an unpublicized case in the Chicago Federal District Court (No. 90 C 6863). The Illinois Bank Commissioner sought an injunction against the Federal Reserve Board to stop them from turning over certain bank records to the House Banking Committee. The records were those of the Chicago branch of Italy’s largest [bank], Banca Nazionale del Lavoro, owned in part by the Vatican.

Called BNL, it had records of Iraqi strongman Saddam Hussein and his secret private joint business dealings with his partner, an American. A close crony of the Federal Reserve, Chicago Federal District Judge Brian Barnett Duff, ordered the return of any records from the Banking Committee, then headed by a Democrat,Rep. Henry Gonzalez (D., Texas).

The House Banking Committee was an intervening party-litigant in the controversy. Judge Duff so opposed the House Banking Committee’s efforts to get those records, that the Judge would not listen to the Committee’s attorney; did not want the attorney in the Judge’s courtroom, the Judge calling him an 800 pound gorilla showing no respect for the court.

In May, 1991, right after the War ended in the Persian Gulf, the case ended up in the Federal Appeals Court in Chicago; a court dominated by Judges tied to the major banks and cronies of the Federal Reserve.

From what I understand,the Illinois Bank Commissioner filed against the Fed at the request of the Fed! What were they hiding? Ron Paul’s question wasn’t bizarre, it was Chairman Bernanke’s response that was bizarre, disrespectful and out of order. It’s time for an apology by Chairman Bernanke. And let’s see those Fed records about Hussein, the Chicago branch of BNL and the Fed!

Bernanke’s response of total ignorance reminds me of the time former Assistant Treasury Secretary for Economic Policy, Phil Swagel told me, with a straight face, he didn’t know what a gold swap was.

When it serves them, these guys have very forgetful memories. Thank the heavens there are people like Ron Paul around to remind them.

UPDATE: Here’s more on possible Fed involvment in the Watergate money. From David T. Beito (Via LRC):

Well, it seems that Paul may have been onto something…or at the very least raised legitimate questions that deserve investigation. A few minutes on google news produced this 1982 story from the Milwaukee Sentinel by Richard Bradee of the paper’s Washington Bureau

“Police who searched the room the Watergate burglars used found $4,200 in $100 dollar bills, all numbered in sequence. Proxmire asked the Federal Reserve Board where the money came from. As he explained in a letter to the late Rep. Wright Patman (D-Tex.), chairman of the House Banking Committee: “I got the biggest run-around [from the Federal Reserve] in years. They ducked, misled, lied, and gave me the idiot treatment.”

More on the Federal Reserve Cover-Up of Payoffs to Saddam Hussein:

Thanks to an anonymous commenter at my earlier post, Fed Chairman Bernanke Should Apologize to Ron Paul,, we now have more evidence of the Federal Reserve cover-up of who paid off Saddam Hussein with crisp new Federal Reserve notes.

Here’s what NYT wrote in 2004:

It has been exactly one month since President Bush announced the capture of Saddam Hussein. American officials interrogating Mr. Hussein are obviously interested in what he knows about illegal weapons programs in Iraq, human rights violations and other crimes. Whether he will cooperate remains to be seen.

But there is another line of questioning officials might pursue — one that depends less on the cooperation of Mr. Hussein than on the assistance of the United States Federal Reserve Bank. Among Mr. Hussein’s possessions when he was captured was three-quarters of a million dollars in United States currency in crisp new bills. Whence came the gentleman’s stash?

Answering this question would help our understanding of terrorist financial networks. And if the cash is sequentially numbered, as is likely, then the question could be easily answered.
All United States currency is printed by the United States Mint, to the order of one of the 12 banks of the Federal Reserve system. It comes into circulation through a bank that has an account at the Fed for which it was printed. The Fed deducts the face value of the bills from that account, and an armored car takes them to their new owner.

That regional Federal Reserve Bank keeps a record that identifies the purchasing bank. And the purchaser knows how it disposed of the bills. When they are found all together, it means that the bank that bought the bills did not feed them out from the teller window or the cash machine, but delivered them to a single customer.

And the bank knows who that customer was. Between, say, Philadelphia and Iraq, there is no doubt a chain, perhaps involving banks in the Cayman or Channel Islands, in Abu Dhabi or Dubai. Still, each bank in the chain can give the name of the customer to which it gave these bills.
Although Saddam Hussein’s government had many sanctions against it, it may well be that no laws were broken in the passage of the Federal Reserve notes from the mint to Tikrit. But it would be interesting to know which banks were collaborators in getting that cash to the tyrant of Iraq.

Unfortunately, the search for these witting or unwitting collaborators cannot even get started, because the Federal Reserve Board will not permit regional banks to reveal the identity of the purchasers of large blocks of United States currency. There is no law that prohibits such disclosure; it’s simply a Fed policy.

And, this from J. Bradley Jansen at Huffington Post:

While the reporting of the exchange does seem “bizarre,” the Congress would have been better served if the Fed chairman had simply addressed the facts. Professor Bob Auerbach of the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin (and an economist at the House Financial Services Committee for eleven years assisting in oversight of the Federal Reserve) brought these issues to light in a book published by a university press:

In Deception and Abuse at the Fed, Robert Auerbach, a former banking committee investigator, recounts major instances of Fed mismanagement and abuse of power that were exposed by Rep. Gonzalez, including:

  • Blocking Congress and the public from holding powerful Fed officials accountable by falsely declaring–for 17 years–it had no transcripts of its meetings;
  • Manipulating the stock and bond markets in 1994 under cover of a preemptive strike against inflation;
  • Allowing 5.5 billion to be sent to Saddam Hussein from a small Atlanta branch of a foreign bank–the result of faulty bank examination practices by the Fed;
  • Stonewalling Congressional investigations and misleading the Washington Post about the6,300 found on the Watergate burglars

Bernanke, ostentatiously a student of the Fed before heading it, does the Congress and the public a disservice by disrespecting Congress with flippant, ignorant responses. Kudos to Chairman Frank for saying we need to followup on Dr. Paul’s issues.

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One Response to “What Ron Paul Knows That Ben Bernanke Does Not”

  1. Mike M Says:

    “Kudos to Chairman Frank for saying we need to followup on Dr. Paul’s issues.”

    Bullshit. Frank wasn’t serious, he was being a facetious, condescending, douchebag, like he always is.

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