Message number 23094 in "AEN NEWS"
Date: 06-26-93  21:28
From: Tom Lane
To:   Everyone
Subj: Fed bailouts of industry

MSGID: 1:382/91 2c2d05f4
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* Forwarded by Tom Lane (1:382/91)
* Area : ECONOMY_NOW (EchoNet: Economy Now)
* From : Jack Koziol, 1:247/106 (Thursday June 17 1993 10:48)
* To   : All Fed Reserve Watchers
* Subj : Fed bailouts of industry
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This is a interesting bit of news about the Federal Reserve Bank but
you will not read or hear about this in the controlled media. It is
wonderful to have a medium such as this to disseminate that news.

****
  Some enterprising gentlemen started a company called *Common Title
Bond ant Trust Corporation* (CTB&T Corp. for short), the purpose of
which was to help out farmers who were defaulting on their loans.
First, the farmer issued a Promissory Note and a deed transfer to
CTB&T Corp in a mutually beneficially arrangement. Then CTB&T issued a
site draft for the amount of the outstanding loan, with (this is the
important part...) instructions that this draft note was to be
presented to the Federal Reserve System in accordance with -- Title 12
USC (paragraphs) 343 and 348 and Section 201.3(c) chapter 11 of 12
Code of Federal Regulations (sic). These laws were to be used when a
sector of the economy was in distress due to a recession.
  The FED Reserve was supposed to honor and discount these notes 17%
and then pay their member banks with their own money to pay for the
loans. But of course you can guess what happen next, the FED Reserve
refuse to honor these notes, but agreed to a meeting with the Board of
Governors of the Federal Reserve Bank.  To discuss fulfilling the
requirements of the law. But instead a complaint was filed against the
CTB&T by the Illinois State Attorney General and an injunction was
granted to prevent them from submitting more load collections to the
Federal Reserve. (I would love to read the arguments for granting the
injunction "But your Honor, they are trying to make the Federal
Reserve system follow the letter of the law" or something to that
effect.)
  The two persons who founded CTB&T appeared in court in an action in
1991, where a Council for the Federal Reserve Bank of St. Louis
testified that the FED has no policies enacted to deal with Title 12
USC 343 & 348 of the law. At this point the judge was miffed because
this was not about policies per se, but about the letter of the law.

  To recap: Title 12 USC 343 & 348 means that the FED is to discount
the loans 17% and use its own funds to pay off its own banks and
agencies to ward off the effects of a deep recession, bank failures,
depressions and budget deficits.
  Do you remember the taxpayer bail out of Chrysler Corp in the early
80's, that was because Lee Iacocca (sic) attempted to use Title 12 USC
343 & 348 to bail out Chrysler but the Federal Reserve could not let
the law apply to them so they let the taxpayers take the fall, besides
when did the Fed ever follow the law when it rules against him. Which
reminds me of a Supreme Court ruling in the 1930's which states that
Congress cannot transfer its powers to private entities, therefore the
Congress has the powers of setting the value of money, not the Federal
Reserve.
  If this law had been followed then the Federal Reserve would of had
to bail out the Savings & Loan and the taxpayers would not have had to.
  More can be read about enactment of the Federal Reserve Act of 1913
in Eustace Mullins, "Secrets of the Federal Reserve."

Chris............

... OFFLINE 1.52  "There's No Place Like A Tax Free Haven."
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 + Origin: Allante BBS St Catharines ON CDN (50:5012/106) (1:247/106)
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--- GoldED 2.41+
 * Origin: FLOTOM * Austin, Tx * (512)282-3941  * H16 (1:382/91)

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