Secret Fed Loans Gave Banks $13 Billion ($7.7 TRILLION)
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.
$7.77 Trillion
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.
“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”
Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.
No Clue
Lawmakers knew none of this.
They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.
LONG article...But if you want to know why OWS people are ticked-off, it's crap like this... And the executives were rewarding themselves with BILLIONS in bonuses for their incompetence...paid for with taxpayer dollars.
And President Obama didn't bother mentioning it or pursue any actions against the bankers. OWS clearly needs to distance themselves from Barack Hussein, corporate stooge.
Or more likely, Bernanke and Geithner thought that the President wouldn't be able to understand finances at this level.
Thomas Sowell: There are no solutions, just trade-offs.
Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan. It was July 21, 2008, and market fears were mounting. Four months earlier, Bear Stearns Cos. had sold itself for just $10 a share to JPMorgan Chase & Co. (JPM)
William Black, associate professor of economics and law at the University of Missouri-Kansas City, can’t understand why Paulson felt impelled to share the Treasury Department’s plan with the fund managers.
“You just never ever do that as a government regulator -- transmit nonpublic market information to market participants,” says Black, who’s a former general counsel at the Federal Home Loan Bank of San Francisco. “There were no legitimate reasons for those disclosures.”
Janet Tavakoli, founder of Chicago-based financial consulting firm Tavakoli Structured Finance Inc., says the meeting fits a pattern.
“What is this but crony capitalism?” she asks. “Most people have had their fill of it.”
FredHayek wrote: And President Obama didn't bother mentioning it or pursue any actions against the bankers. OWS clearly needs to distance themselves from Barack Hussein, corporate stooge.
Or more likely, Bernanke and Geithner thought that the President wouldn't be able to understand finances at this level.
Gee, since it all took place in 2008, and was already signed, sealed & delivered by BUSH, perhaps Obama didn't know yet? I'll wait for the dates to sink in...
Paulsen should be behind bars. I still think Bush was too stupid to know what he did, but a good public tarring and feathering is in order. Geithner works for the same people...I wonder what we'll find out about in another 4 years.
LadyJazzer wrote: LONG article...But if you want to know why OWS people are ticked-off, it's crap like this... And the executives were rewarding themselves with BILLIONS in bonuses for their incompetence...paid for with taxpayer dollars.
And apparently President Obama is pleased with Bush's Fed Chairman... "on February 1, 2006. Bernanke was confirmed for a second term as Chairman on January 28, 2010, after being nominated by President Barack Obama." Any wonder? The Political Class is a bipartisan club, composed of most politicians (right and left), big business, special interest and crony capitalists. Thanks for bring this to light LJ. Now... as soon as the OWS people can give up thinking the left will solve all the problems... maybe they will find some solidarity with the rest of the 99 percent who have had enough of the Political Class. Until that point the OWS is just another part of the problem... aiding and abetting the criminal politicians.
FredHayek wrote: And President Obama didn't bother mentioning it or pursue any actions against the bankers. OWS clearly needs to distance themselves from Barack Hussein, corporate stooge.
Or more likely, Bernanke and Geithner thought that the President wouldn't be able to understand finances at this level.
Gee, since it all took place in 2008, and was already signed, sealed & delivered by BUSH, perhaps Obama didn't know yet? I'll wait for the dates to sink in...
BHO was already getting briefed on international affairs by then, you think they would have clued him in on trillions of dollars.
And neither Holder nor his boss the President thought to bring charges against Paulsen. Sounds like Obama is still part of the problem. Remember Wall Street has made more in 2.5 years of Obama than 8 years of Bush.
Maybe they know he is just an empty suit who won't interfere as long as the campaign donations keep on rolling in, right? :thumbsup:
Thomas Sowell: There are no solutions, just trade-offs.
Oh, I keep forgetting... 60 days should have been enough time to be briefed on ALL of the disasters that Bush created, (including the ones that the Fed was doing its best to hide), and turn the battleship on a dime...
Yeah, I know who the empty-suit was... And he'd already screwed-the-pooch by December of 2008. You want to stand by that? Good, then let's talk about Bush's failure to respond to the intelligence that Osama bin Laden and Al Qaeda were planning an attack on New York City....
LadyJazzer wrote: Oh, I keep forgetting... 60 days should have been enough time to be briefed on ALL of the disasters that Bush created, (including the ones that the Fed was doing its best to hide), and turn the battleship on a dime...
Yeah, I know who the empty-suit was... And he'd already screwed-the-pooch by December of 2008. You want to stand by that? Good, then let's talk about Bush's failure to respond to the intelligence that Osama bin Laden and Al Qaeda were planning an attack on New York City....
You're funny... Thanks for the laugh... rofllol
Why. I don't think that is the subject of this thread, the subject that you started. Stupid deflection, but par for your course. As soon as someone tweeks your partisan rear end, you get ready to bug out. Chicken-crap. The empty suit Obama has had enough time to take the reigns himself yet he hasn't. He doesn't even talk with Congress or the people in his administration...
What are we trying to do in this administration? Why does he want a second term? Would he tell us? What’s he going to do in the second term? More of this? Is this it? Is this as good as it gets? Where are we going? Are we going to do something the second term? He has yet to tell us. He has not said one thing about what he would do in the second term. He never tells us what he is going to do with reforming our healthcare systems, Medicare, Medicaid, how is going to reform Social Security. Is he going to deal with long-term debt? How? Is he going to reform the tax system? How? Just tell us. Why are we in this fight with him? Just tell us, Commander, give us our orders and tell us where we’re going, give us the mission. And he hasn’t done it.
Yea... that little diatribe above is from that right-wing-nut-case Chris Matthews from MSNBC. Read the whole interview. About the only thing "I get a tingle up my leg" Matthews doesn't use is the words "empty suit." But by goodness... he's practically quoting a dictionary description of an empty suit. When your biggest partisan media cheerleader starts dissing you this way... you know the pooch-is-screwed... man's best friend... empty suit Obama.
Obama while still a senator and running for the presidency voted YES for the TARP. Then when he took office he requested a check for the remaining 350 billion dollars along with doing a seperate stimulus bill.
So he knew about it, he voted for it, and he used it. So his hands are dirty to.
