Bernanke Calls Ron Pauls “Audit The Fed” Bill a Nightmare Scenario

The House voted Wednesday overwhelmingly to validate Rep. Ron Paul’s (R-TX) legislative decade long battle to get the Government Accountability Office (GAO) to audit the very private inaccurately named Federal Reserve, despite the central bank’s chairman warning that such action could result in a “nightmare scenario.”

Members of the House passed Paul’s “Audit the Fed” bill by a vote of 327-98. Only one Republican, Rep. Bob Turner(NY), voted against the bill. 89 Democrats joined Republicans in passing the bill, including outgoing Rep. Dennis Kucinich (D-OH), who cited recent reporting by The Washington Post that claims the New York Federal Reserve knew but did not tell regulators about manipulation a key inter-bank lending rate known as Libor.

“The Fed creates trillions of dollars out of nothing and gives it to banks, Congress is in the dark,” he said. “The Fed sets the stage for the subprime meltdown, Congress is in the dark. The Fed takes a dive on Libor, Congress is in the dark. The Fed doesn’t tell regulators what is going on, Congress is in the dark.”

Senate Majority Leader Harry Reid (D-NV), must like being in the dark as he has refused to bring the bill up.

Paul supported a Fed audit in 2010 that was incorporated into the Dodd-Frank Wall Street Reform and Consumer Protection Act. That audit required the Fed to disclose its lending practices during the 2008 financial crisis, revealing that the bank doled out more than $16 trillion in loans and assets swaps to financial institutions all over the world in an effort to stabilize global markets. Paul was not satisfied as he said ultimately the Dodd-Frank audit was a stripped-down version of his original proposal because it did not examine Fed monetary policy negotiations as well.

Speaking last week to the House Financial Services Committee, which is chaired by Paul, Bernanke warned that any effort by Congress to undermine the independence of the Fed would weaken its ability to stabilize the economy in the event of a crisis like the near-collapse of 2008.

“The nightmare scenario that I have is one in which some future Fed chairman would decide to say, raise the federal funds rate by 25 basis points, and somebody in this room would say, ‘I don’t like this decision and I want the [Government Accountability Office] to go in… and give us an independent opinion of whether or not that would be the right decision,’” he said.

The real nightmare scenario would be the American public actually seeing how the Fed’s manipulative and deceitful actions benefit the few at the expense of the many.

Critics Say Foreclosure Review Program Designed to Fail

4.3 million forms have been sent out under a flagship U .S. program to try to help the estimated 4 million people who may have suffered financially due to errors in their mortgage servicing.

Critics point to the fewer than 5 percent of potential beneficiaries, 214,000, who have requested a review of their cases as confirmation of suspicions that the process was designed to protect banks, not help consumers.

A February 2012 audit by San Francisco County officials found that 84 percent of the 400 foreclosures they examined contained irregularities.

An Independent Foreclosure Review was launched last November by 14 major mortgage servicers and targeted borrowers whose homes were in foreclosure during 2009 and 2010. Tens of thousands of homeowners have been found to be victims of the “robo-signing” scandal in which employees of mortgage servicing firms made up bogus documents to speed up foreclosures.

Depending on the nature of errors, remediation amounts range from $500 to $125,000 plus lost home equity – sums that consumer advocates say often pale in comparison to the overall financial and emotional damage caused by a wrongful foreclosure.

A report released last week by the Government Accountability Office found that the letters’ sent out to homeowners contained complex language, omissions of important information about remediation, and a failure to consider that some recipients speak or read little English which could “impede some borrowers’ ability to respond.”

In addition to the overwhelming lack of response, more than 5 percent of letters were returned as undeliverable, a problem that could have been prevented if counselors and others on the front line of the U.S. housing crisis had been involved when the outreach program was designed.

“The people who are most likely to receive one of these letters and be eligible are no longer at their addresses,” said Walter Walker, who has worked as a housing counselor for 20 years in Florida. “We have the resources to follow up, and in some cases find these people, but to my knowledge, not one housing counselor was consulted.”

Consumer advocates say the low numbers are indicative of the outreach’s flawed design.

While almost half of U.S. adults read at the level of a 13- or 14-year-old, the form is written at a second-year college level, according to an analysis by a consumer group.

The letters and the review’s website were not tested with target audiences, and the letters were sent out only in English, although 5.5 percent of the adult population in the United States reports they speak poor or no English.

Walker said his clients declined to fill out the form when they realized they were not guaranteed compensation, or were suspicious of it and unwilling to give out personal permission.

“Those were the two most common responses I got other than, ‘What is this?’ and throwing it in the trash can,” he said.

To improve the process, the GAO recommended making the form and website more readable and analyzing trends in borrower response and non-response.

The OCC spokesman said the agency is in the process of implementing the recommendations of the GAO’s report but could not comment on cases reviewed to date. He said the agency is considering doing an additional round of mailings before a new deadline on Sept. 30.

“The OCC has now essentially admitted that their outreach is a failure,” said Diane Thompson, an attorney with the National Consumer Law Center.

“They’ve now twice extended the time that people have to respond after being extremely adamant both times that there was not going to be an extension. The only reason to extend it is because your numbers are embarrassing.”

Obama Administration Drops Program That Helped Uninsured Find Coverage

The Centers for Medicare and Medicaid Services are ending a program that paid out a $100 incentive to agents and brokers to refer patients to the Pre-Existing Condition Insurance Plan, PCIP, which was created by President Obama’s health care reform. The PCIP  helps who can’t find affordable health insurance because of pre-existing health conditions.

The PCIP has been a failure to date only enrolling 56,257 people, far below the 200,000 to 375,000 people who were projected to join and a tiny fraction of the 50 million uninsured. The $5 billion set aside for the program has been spent faster than predicted as the cost of each individual that enrolls costs more than double the government prediction of $29,000 a year .

The Obama administration announced last year that it would start paying insurance agents and brokers $100 whenever they helped eligible people obtain coverage through the program.

Premiums were also lowered and rules relaxed for those eligible, though a person must still have been uninsured for at least six months to get qualify.

The fees helped grow the program, according to the Obama administration. “We know that agents and brokers played a role in boosting the awareness of and increasing enrollment in PCIP during this campaign, and on average, about 10 to 15% of enrolled applications to the federal PCIP involved an agent that qualified for the fee,” CMS said in a written statement. “We have seen increases in awareness and enrollment. More people know about PCIP.”

There are anywhere from 36 to 122 million Americans who have a pre-existing condition that health insurance companies can use as an excuse to refuse coverage, offer plans that covers everything but the pre-existing condition or charge exorbitant rates, according to a new report by the Government Accountability Office.

The health care reform law will prohibit all insurance companies from denying health benefits because of pre-existing conditions beginning in 2014. The PCIP will expire at that time.

Drone Crashes into SWAT Team Tank During Police Test

A drone crashed during a test flight near Houston, adding to growing safety concerns as more police departments across the country begin using the unmanned aircraft.

County authorities and the maker of the drone confirmed that a recent police-only photo mission did not go exactly as planned.

The sheriff’s SWAT team loaded up with equipment and their armored vehicle known as the “Bearcat,” were waiting to be photographed by the prototype drone from Vanguard Defense Industries . It was basically a photo op, according to those in attendance.

Vanguard CEO Michael Buscher said his company’s drone was flying about 18-feet off the ground when it started having trouble. It’s designed to go into an auto shutdown mode, but when it was coming down the drone crashed into the SWAT team’s armored vehicle.

The damage was limited, according to Buscher, who described it as only some ‘blade strikes’ on the prototype.

This is the exact scenario that the Government Accountability Office presented as a major concern over the growing use of police drones in 2008.

In the 2008 GAO study, Gerald Dillingham, Director of Civil Aviation for GAO said,

“The concern is that you could lose control of that aircraft and it could crash into something on the ground or, in fact, it could crash into another air vehicle.”

The GAO study found that 65% of drone crashes were caused by mechanical failures. The study analyzed Pentagon and NASA data on 199 crashes of drones on battlefields.

Before this Montgomery County crash, the only crash of a law enforcement drone was recorded in 2006 in Nogales, Arizona. The Customs & Border Protection flight crashed in the desert due to the same “lost link” scenario that sent the Montgomery County unit crashing into its SWAT team tank.

When the link between the drone and the control console on the ground is lost, drones are designed to glide to a landing. In some cases, the drones already have a location programmed in for landing in the event of a problem.

Dillingham said that’s another dangerous problem with drones in urban areas.

“If you’re onboard the aircraft, you can tell that you’re in turbulence and you can maneuver to get the plane or the aircraft out of the turbulence.   But if you’re using a UAV and there are no sensors aboard, you don’t really know that and, again, if you lose that communication link as a result of that turbulence or for any other reason, then you have an aircraft that is not in control and can, in fact, crash into something on the ground or another aircraft.”

The 73-page GAO study found 17-percent of the crashes studied were blamed on operator error and 12-percent were listed as unknown causes.