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, you can see what they were hiding. Be sure to roll the interactive tool across the graph – it shows who benefited, and by how much.
The Fed hid the facts about which banks were so badly overextended (“insolvent”) that they required a combined $1.2 trillion on Dec. 5, 2008. Predictably, banksters lied, assuring investors their firms were healthy while hiding the fact that they took billions of dollars in taxpayer-funded emergency loans. 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. In spite of that unjust enrichment, they refuse to consider Principal Reduction as an option to alleviate the housing crisis. [In her article, Principal Reduction Will Solve The Housing Crisis and Jumpstart The Economy, Tanya Marchiol presents a compelling argument for the win-win solution principal reduction presents.]
Saved by the bailout, banksters lobbied against government regulations, abetted by the Fed, which withheld the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse. Lawmakers had no clue that one bank, New York-based Morgan Stanley, 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. The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said publicly that only “healthy institutions” were eligible.
A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, when guarantees and lending limits are considered, the Fed 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.
No one on Wall Street or on the board of the lenders that perpetrated these manifold frauds have been prosecuted, and Americans continue to be consumed with the clown car of election politicking. Nothing of real value or consequence to the quality of life in our country is being discussed in the Corporate Media, and particularly not in the “debates.”
Meanwhile, we continue to struggle to cope with the theft of 20% to 30% of our personal resources, and services diminished by the siphoning of public finds by MegaCorp.