OBAMA GIVES COMMUNIST CHINA KEY TO THE U.S. TREASURY

 Evidence of China's growing sophistication as a money manager in the U.S. markets is clear in its expansion of operations in New York.

(Reuters) - China can now bypass Wall Street and go straight to the U.S. Treasury any time it wants, in what is the Treasury's first-ever direct relationship with a foreign government, according to documents viewed by Reuters. The relationship means the Communist People's Bank of China buys U.S. Treasury Notes using a different method than any other central bank in the world. China now holds $1.17 trillion in U.S. Treasuries. The privilege has  helped China obtain U.S.Treasuries for a better price by hiding Wall Street's knowledge of its buy ups. In 2009, when Treasury officials found China was using special deals with primary dealers to conceal its U.S. purchases, the Treasury changed a rule to outlaw those deals, Reuters reported last June. But at the same time it relaxed a reporting requirement to make the Chinese more comfortable with the amended rules.The granting to China of direct  access to the U.S. Treasury is controversial because some government officials are concerned that China has gained too much leverage over the United States through its large Treasury holdings. Economist Brad Setser, who is a member of the National Economic Council and has also served on the National Security Council, has argued China's large Treasury holdings pose a national security threat.
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