Apr 15 2009
By Bernie Delinski
U.S. Sen. Richard Shelby criticized the Federal Reserve System on Monday for its role in the nation's economic woes.
Speaking at a Shoals Chamber of Commerce luncheon, Shelby, a Republican from Tuscaloosa, also expressed concern about the United States' mounting debt.
"We are at $12.5 trillion as a debtor nation," he said. "We'll probably add seven to eight trillion more in the next several years. That doesn't bode well for our future.
"The Federal Reserve is printing money like I've never seen."
Shelby, the ranking member of the U.S. Senate's Banking, Housing and Urban Affairs Committee, said printing more money won't solve the crisis.
"I used to be in awe of the Federal Reserve," he said. The senator said that perspective has changed.
"They're in unchartered waters," said Shelby, who served on the banking committee for 23 years. "They've printed too much money."
Shelby blamed banking problems that arose during his tenure on the committee to former Fed Chairman Alan Greenspan, who told him everything was OK.
Loaning institutions have gotten in trouble to the point where they rely on federal bailouts. Shelby points out that Federal Reserve officials are the regulators of the holding companies.
"They were basically letting the banks regulate themselves," he said.
Shelby also criticized Detroit automakers that are seeking federal assistance.
"I wish them well, but not with your money," he said.
The senator said the economy is a global problem, with nations such as Japan, China and Germany also in recessions. "This country will straighten out, but it's not going to be easy," he said.
Shelby opposes the federal stimulus package and said borrowing money isn't the answer to economic problems.
He recommends changing the banking system and points out that all banks are not in trouble. Shelby points to community banks as examples.
"People who stayed with fundamental banking have been doing well," he said.
During a question-and-answer period, an audience member asked Shelby what he considers the greatest threat to the nation.
The senator said foreign dependence on energy and gas is the biggest long-term threat. He said the greatest immediate need is "getting our financial house back in order."
In response to another question, Shelby said he believes the Federal Reserve will extend the $250,000 Federal Deposit Insurance Corp. cap. "It will be expanded, but we'll have to see how to restructure that."
Another audience member voiced concern over health care cuts. Shelby replied President Obama and other Democrats are pushing a national health-care plan that leaves plenty of questions.
"Who's going to pay for it and what's the quality going to be?" Shelby asked. "We're talking about rationing health care."
He said the nationalized system in Canada has caused some of its residents to come to the United States for health care. "I don't think a national plan will really work."
He didn't offer an alternative plan or address whether there is a need for one.
Shelby was asked about the Community Reinvestment Act. The 1977 federal law encourages lending institutions to provide loans in all neighborhoods, including low- and moderate-income areas.
"Bank loans should be based on ability to repay the loan, not on some social experiment," Shelby responded.