HON. RON PAUL
OF TEXAS
IN THE HOUSE OF REPRESENTATIVES
Thursday, February 25, 2010
2010 Ron Paul 9:1
Mr. PAUL.
Madam Speaker, I would like to
enter into the RECORD the following letter from
Professor Robert D. Auerbach, a professor at
the LBJ School of Public Affairs at the University
of Texas. This letter provides additional information
regarding remarks I made at yesterdayís
Financial Services Committee Humphrey-
Hawkins hearing, remarks which Federal
Reserve Chairman Bernanke categorized
as “bizarre.”
2010 Ron Paul 9:2
THANK YOU CONGRESSMAN RON PAUL FOR
BRINGING THESE IMPORTANT FACTS TO THE
PUBLICíS ATTENTION
2010 Ron Paul 9:3
I thank Congressman Ron Paul for bringing
to the publicís attention the Federal Reserve
coverup of the source of the Watergate
burglarsí source of funding and the defective
audit by the Federal Reserve of the bank
that transferred $5.5 billion from the U.S.
government to Saddam Hussein in the 1980s.
Congressman Paul directed these comments
to Federal Reserve Chairman Ben Bernanke
at the House Financial Services Hearing
February 24, 2010. I question Chairman
Bernankeís dismissive response.
2010 Ron Paul 9:4
BERNANKE:
“Well, Congressman, these
specific allegations youíve made I think are
absolutely bizarre, and I have absolutely no
knowledge of anything remotely like what
you just described.”
2010 Ron Paul 9:5
The evidence Congressman Ron Paul mentioned
is well documented in my recent
book, Deception and Abuse at the Fed (University
of Texas Press: 2008). The head of the
Federal Reserve bureaucracy should become
familiar with its dismal practices.
2010 Ron Paul 9:6
First, consider the Fedís coverup of the
source of the $6,300 in hundred dollar bills
found on the Watergate burglars when they
were arrested at approximately 2:30 A.M. on
June 17, 1972 after they had broken into the
Watergate offices of the Democratic Party.
Five days after the break-in, June 22, 1972, at
a board of directorsí meeting of officials at
the Philadelphia Fed Bank, it was recorded
in the minutes [shown on page 23 of my
book] that false or misleading information
had been provided to a reporter from the
Washington Post about the $6,300. Bob Woodward
told me he thought he was the Washington
Post reporter who had made the
phone inquiry. The reporter “had called to
verify a rumor that these bills were stolen
from this Bank” according to the Philadelphia
Fed minutes. The Philadelphia Fed
Bank had informed the Board on June 20
that the notes were “shipped from the Reserve
Bank to Girard Trust Company in
Philadelphia on April 3, 1972.” The Washington
Post was incorrectly informed of
“thefts but told they involved old bills that
were ready for destruction.”
2010 Ron Paul 9:7
The Federal Reserve under the chairmanship
of Author Burns not only kept the Fed
from getting entangled in the Watergate
coverup, which the Fedís actions had assisted,
it allowed false statements about
bills the Fed knew were issued by the Philadelphia
Fed Bank to stand uncorrected.
Blocking information from the Senate and
House Banking Committees [letters shown in
my book, Chapter 2] and issuing false information
during a perilous government crisis
imposed huge costs on the public that had
insufficient information to hold the Fed officials
accountable for what they had withheld
from the Congress. Had the deception been
discovered the Fed chairmen following Burns
may have been forced to rapidly implement
some real transparency to restore the Fedís
credibility. That would have reduced or
eliminated many of the deceptions, and corrupt
practices that are described in my book.
2010 Ron Paul 9:8
The second subject brought up by Congressman
Ron Paul is the exposure of faulty
examinations of the Federal Reserve of a foreign
bank in Atlanta, Georgia through which
$5.5 billion was sent to Saddam Hussein that
a Federal Judge found to be part of United
States active support for Iraq in the 1980s.
2010 Ron Paul 9:9
On November 9, 1993, several federal marshals
brought a prisoner, Christopher
Drogoul, into my office at the Rayburn
House Office Building of the U.S. House of
Representatives. The marshals removed the
manacles. Drogoul took off his jump suit and
changed into a shirt, tie, and business suit.
He immediately looked like the manager of
the Atlanta agency with domestic headquarters
in New York City of Banca
Nazionale. Drogoul had come to testify
about a “scheme prosecutors said he masterminded
that funneled $5.5 billion in loans to
Iraqís Hussein through BNLís Atlanta operation.
Some of the loans allegedly were used
to build up Iraqís military and nuclear arsenals
in the years preceding the first Gulf
War.í”
2010 Ron Paul 9:10
Drogoulís “ëoff bookí BNL-Atlanta funding
to Iraq began in 1986 as financing for products
under Department of Agriculture programs.í”
The loans allegedly had been authorized
by the U.S. Department of Agriculture.
Since Drogoul told the committee
he was merely a tool in an ambitious scheme
by the United States, Italy, Britain and Germany
to secretly arm Iraq in their 1980ñ88
war, the testimony was politically contentious
and unproven. He was sentenced in November
1993 to 37 months in prison and he
had already served 20 months awaiting his
sentencing hearing.
2010 Ron Paul 9:11
U.S. District Judge Ernest Tidwell found
that the United States had actively supported
Iraq in the 1980s by providing it with
government-guaranteed loans even though it
wasnít creditworthy. The judge said such
policies “clearly facilitated criminal conduct.”
2010 Ron Paul 9:12
Gonzalez was drawn to Drogoulís answer
about the Fed examiner who had visited his
Atlanta operation. Gonzalez said that:
2010 Ron Paul 9:13
“At the November 9, 1993 Banking Committee
hearing I asked Christopher Drogoul,
the convicted official of the Banca Nazionale
Del Lavoro agency branch in Atlanta, Georgia,
how the Federal Reserve Bank examiners
could miss billions of dollars of illegal
loans, most of which ended up in the hands
of Hussein.
2010 Ron Paul 9:15
The task of the Fed [bank examiner] was
simply to confirm that the State of Georgia
audit revealed no major problems. And thus,
their audit of BNL usually consisted of a one
or two-day review of the state of Georgiaís
preliminary results, followed by a cup of espresso
in the managerís office.”
2010 Ron Paul 9:16
Gonzalez was appalled at the of lack of effective
examination of a little storefront
bank and also appalled by the gifts exchanged
by officers of the New York Federal
Reserve and the regulated banks in New
York City where the main U.S. office of BNL
was located. A description of what followed
is in my book.
2010 Ron Paul 9:17
The Fed voted in 1995 to destroy the source
transcripts of its policy making committee
that had been sent to National Archives and
Records Administration. Chairman Alan
Greenspan had the committee vote on this
destruction, telling the members: “I am not
going to record these votes because we do
not have to. There is no legal requirement.”
(p. 104 in my book.) Greenspan thus removed
any fingerprints on this act of record destruction.
Donald Kohn, who is now Vice
Chairman of the Board of Governors at the
Federal Reserve, answered some questions I
had sent to Chairman Greenspan about this
destruction. Kohn replied in a letter on November
1, 2001 to me at the University of
Texas that they had destroyed the source
records for 1994, 1995 and 1996, they did not
believe it to be illegal and there was no plan
to end this practice. That is one reason why
the Federal Reserve audit supported by Congressman
Ron Paul is needed. The Fed must
stop destroying its records.
