Federal Reserve provided $16 trillion in secret bailout loans during credit crisis

July 22, 2011 by · Leave a Comment
Filed under: Global News 

First off I’ll apologize for the less frequency in news pieces.  I have been in the process of moving and it has not gone as smooth as you’d wish.  Regardless, how could I ever pass on a juicy nugget like this one from the outspoken gentlemen from Vermont, Senator Bernie Sanders.

$16 trillion dollars is actually quite a bit of money.  That is more than the total Gross Domestic Product (GDP) of the united states for an entire year.  365 days of any productive commerce in America.  A GAO report has been published that investigates the accounting of the U.S. central banking institution. It is a 236 page report and I don’t have any opinion until I sit down and read it, which I intend to very shortly, like now.  I found a chart in the appendix that showed a $8 trillion dollar loan / exchange / swap to the European Central Bank.  Bank of England and the Swiss National Bank also were also heavy recipients of assistance from the Fed.  Hopefully more insightful data points are waiting to be uncovered.

What we are in a sense saying is that the banking system in its present state is “so” important that it or parts will not be allowed to fail from market forces.  This problem is their is no limit to the amount of credit or assistance that can be given.  These dollars are not totally sterile, these banks us them as reserves that loans can be made against.  This question should be the prerogative of the people and we should be made aware when such use of our credit facilities are made. This is the great moral hazard, now they know they in fact are “too big to fail”.

Sen. Sanders Website:

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

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Federal reserve finally reveals secret bailout loan details per judgement

April 1, 2011 by · Leave a Comment
Filed under: Legal News 

Remember, nothing is for free and this disclosure is not an exception.   It has been 2 years since this legal action start to get the secret bank bailout loans that were made during the financial crisis of 2008-present.  The U.S. Federal Reserve released the details per the judgment of the courts that has to do with the Bloomberg L.P lawsuit.  But now we have a law in place that starting in 2012, the Fed will be required to reveal these type of details in the future but with a mandatory 2-month delay.

What this means is now we have codified in law a delay on secret loans as public-private partnership makes on behalf of the U.S. Congress.   Who I add are not elected so we do not really know at all times which mandate they are following, full employment (pro-banks) or stable prices (pro-savers & investors).  We have basically codified secrecy in this part of our market system.  That gives great advantage to the organizations that are receiving this type of public support and harmful to  anyone who competes with these institutions and does not get the same favor (ie: WaMu, Lehman, Bear Sterns, etc.).  Not to say those companies I mentioned did not operate is a self-interested greedy manner but they did not get the red carpet treatment.

MSN Money – The Federal Reserve released thousands of pages of secret loan documents under court order, almost three years after Bloomberg LP first requested details of the central bank’s unprecedented support to banks during the financial crisis.

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