A House watchdog subcommittee announced yesterday that it has been conducting an investigation into "allegations that major U.S. banks have deliberately driven down the dollar in order to realize short term profits."
House Banking Committee oversight subcommittee chairman Joseph Minish (D-N.J.) and ranking minority member Charles Grassley (R-Iowa) said the subcommittee at their direction began the investigation some three weeks ago after a series ofstories in The Washington Post outlining charges made by a former foreign money trader for Citibank.
Minish and Grassley said they hoped to hold hearings "early in the new Congress in a further attempt to determine the validity of these allegations."
Subcommittee staffers said the hearings could even come before the scheduled Jan. 15 return of congress.
The former Citibank, officer involved, David Edwards, worked at the bank's Paris and Amsterdam offices before he was fired. He contends he was dismissed because he kept raising allegations within the bank of improper and illegal activities in the bank's European operations. He has filed a $14 million civil suit in New York charging wrongful dismissal.
For its part the bank says Edwards was fired because he refused to accept a transfer to New York while his charges were being investigated.
Edwards also raised eyebrows in the financial community when he wrote a magazine article describing the activities of overseas money traders for U.S. banks, implying that many of these traders get together to create short-term transaction involving huge sums that help facilitate fluctuations in the price of the dollar and subsequently allow their respective banks to profit on these fluctuations.
"The alleged bank activity," Minish and Grassley said in their statement yesterday, "if substantiated raises extremely serious questions about our government's ability to control effectively the dollar's decline and curtail runaway inflation. If these banks are indeed seeking profits by manipulating the dollar, they are adversely affecting the cost of living, the value of the dollar, and even the prestige of the U.S. in the world community."
"The complex nature of the international monetary market and the speed at which these transactions take place makes it a very difficult subject to get a handle on," the two congressmen said.
"Clearly," they added, "it is the responsibility of the congress to insure that monetary policy is being conducted by our government for the benefit of our citizens, not by a few giant banks for their own private profit."