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| An anti-Wall Street demonstrator shouts slogans in front of the Federal Reserve Bank (AFP Photo / Frederic J. Brown) |
We knew the
last bailout from the Federal Reserve was pretty big, but not until now did we
have statistics on the actually tally. If you thought that the $700 billion
bailout for TARP was big, get a load of this.
Just
exactly how big was the Federal Reserve’s bailout of the banks between the
years of 2008 and 2010? Thanks to a Federal Request of Information Act gone
fulfilled, America now knows the truth behind a colossal cover-up: almost $8
trillion.
Ever since
the Fed stepped in to bail out the biggest banks in the country, Ben Bernanke
and company have gone to great lengths to keep the exact details of the
transactions a secret, citing that the truth would cause concern for the world
financial crisis far greater than what was already at hand, saying in
particular that investors would step away from the “too big to fail” banks that
were benefiting from the bailout. And while Fed Chairman Ben Bernanke went on
the record to call the bailouts to even the most “sound institutions” only
“marginal,” details of the FOIA request obtained by Bloomberg News now reveals
that the Federal Reserve spent nearly half of the entire production output of
the US during that span of less than two years — the biggest bailout in the
country’s history — while going to great lengths to keep Congress and the
American people in the dark.
By March of
2009, the Fed had already dished out $7.77 trillion to save the US financial
system, dwarfing other assistance programs several times over. As the financial
sector was on the brink of collapse, neither the Fed nor the banks involved
came clean with the truth, instead lying through their teeth to keep the total
facts a mystery. Until now.
While the
banks kept the bailout a secret from Congress, they lobbied to the Legislative
Branch to imply more lax governmental regulations on the industry, something
that would haven arguably been near impossible had the truth surfaced at the
time.
The website
Naked Capitalism explains it pretty clearly in not so many words: “The bottom
line is everybody close to the process lied like crazy.”
On November
26, 2008, Bank of America Chief Executive Officer Kenneth D. Lewis told
shareholders that he ran “one of the strongest and most stable major banks in
the world.” On that very day, BofA was indebted to the Fed something to the
tune of nearly $90 billion. Less than two weeks later, the Federal Reserve blew
$1.2 trillion total in a single day to bail out the breaking financial
institutions.
All the
while, of course, banks were borrowing loans at interest rates of as low as
0.01 percent. “No one calculated until now that banks reaped an estimated $13
billion of income by taking advantage of the Fed’s below-market rates,” writes
Bloomberg now.
That’s not
the worst part, either. As the Fed continues to operate without oversight from
the Executive, Legislative and Judicial branches, further bailouts are
guaranteed to keep being generated at the cost of the American taxpayer while a
recession still seems imminent — if not already occurring. Critics including
presidential hopeful Congressman Ron Paul have lobbied to abolish the Federal
Reserve once and for all. Could the next president help make that dream a
reality? In the meantime, don’t be surprised if billions get borrowed at
America’s expense minute by minute.
Secret Fed Loans Helped Banks Net $13 Billion (Bloomberg)
Civil Action #8500, United States District Court for Southern District of New York,Nov 23, 2011
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Recession:
Then-President George W. Bush declared the
country in a recession on Friday,
Dec. 5, 2008, the same
day that the loans had hit their peak
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Civil Action #8500, United States District Court for Southern District of New York,Nov 23, 2011
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