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,
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
The IMF is an international banking organization that is also controversial.
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
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
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 un-discussed.
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
Payment and settlement
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
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
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.,
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
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.
The Financial Stability Board (FSB) is an
international body that monitors and makes recommendations about the global financial
system. It was established after the 2009 G-20 London summit in April 2009 as a
successor to the Financial Stability Forum. The Board
includes all G-20 major economies, FSF members, and the European Commission. It is based in Basel,
Financial Stability Board emerged from the Financial Stability Forum (FSF), a
group of finance ministries, central
bankers, and international financial bodies. The FSF was founded in 1999 to
promote international financial stability, after discussions among Finance
Ministers and Central Bank Governors of the G7 countries, and a study
which they commissioned.
The FSF facilitated discussion and co-operation on supervision and surveillance
of financial institutions, transactions and events. FSF was managed by a small
secretariat housed at the Bank for International Settlements
in Basel, Switzerland.
The FSF membership included about a dozen nations who participate through their
central banks, financial ministries and departments, and securities regulators,
including: the United States, Japan, Germany, the United
Italy, Canada, Australia,
and several other industrialized economies as well as several international
At the G20 summit on November 15, 2008 it was agreed that the membership of the
FSF will be expanded to include emerging economies, such as China. The 2009 G-20 London summit decided to
establish a successor to the FSF, the Financial Stability Board. The FSB
includes members of the G20 who were not members of FSF.
Financial Stability Forum met in Rome on 28–29 March 2008 in connection with the Bank for International Settlements.
Members discussed current challenges in financial markets, and various policy
options to address them from this point forward.
At this meeting, the FSF discussed a report to be delivered to G7 Finance Ministers and
Central Bank Governors in April 2008. The report identifies key weaknesses
underlying current financial turmoil, and recommends actions to improve market
and institutional resilience. The FSF discussed work underway at the International Monetary Fund (IMF) and Organisation for
Economic Co-operation and Development (OECD) with regard to sovereign wealth funds (SWFs). The IMF is
working closely with SWFs to identify a set of voluntary best practice
guidelines, and is focusing on the governance, institutional arrangements and
transparency of SWFs.
On April 12, 2008 the FSF delivered a report
to the G7 Finance Ministers which details out its recommendations for enhancing
the resilience of the financial markets and financial institutions. These are
in five areas:
- Strengthened prudential
oversight of capital, liquidity and risk management
- Enhancing transparency and
- Changes in the role and uses
of credit ratings
- Strengthening the
authorities' responsiveness to risks
- Robust arrangements for
dealing with stress in the financial system 
FSB represents the G-20 leaders' first major international institutional
innovation. Secretary of the US Treasury Tim Geithner has described it as
"in effect, a fourth pillar" of the architecture of global economic
governance. The FSB has been assigned a number of important tasks, working
alongside the IMF, World Bank, and WTO. Chairman of the board is the Canadian Mark Carney,
Governor of the Bank of Canada.