Did Bernanke know about the fraud on Monday? Did Societe Generale tell the Bank of France, who then would have told the ECB? Did the ECB inform the Fed?
The dumping of all those futures contracts, says the WSJ, certainly contributed to the market falls on Monday and Tuesday. What now for the presumed Fed Cut on January 30? IF Bernanke knew of the fraud, then he acted partly on that basis, if he didn’t then he acted without knowing the full picture.
This story will run, and is certainly bigger than the individual fraudster himself.#
According to this breaking Bloomberg story: Federal Reserve policy makers didn’t know about a $7.2 billion trading loss at Societe Generale SA prior to their Jan. 21 decision to reduce interest rates.
Policy makers were convinced by late December that increasing volatility in financial markets reflected a weakening U.S. economy and that further rate reductions were needed, said the official, who spoke on condition of anonymity.
The Federal Open Market Committee convened a conference call at 6 p.m. on Jan. 21 after stock markets in Asia and Europe tumbled. Members voted to cut the federal funds rate by three quarters of a percentage point, the most since the Fed began using the rate as its main tool of monetary policy in 1990, to 3.5 percent. Chairman Ben S. Bernanke and his colleagues concluded that losses in financial markets may result in reduced credit for companies and consumers, the official said.