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Ear to the Ground

Secret Fed Loans Gave Banks Big Profits During Bailout

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Posted on Nov 29, 2011
Wikimedia Commons / Dan Smith (CC-BY-SA)

Here we have some news that Ohio Sen. Sherrod Brown believes “can unite the tea party and Occupy Wall Street.” Sound implausible? Well, Bloomberg News’ parent company went to court to access 29,000 pages of documents from the Federal Reserve, from which the outlet gleaned that, thanks to hefty Fed loans during their time of great need, big banks not only escaped the disaster of their own making but raked in major profits behind taxpayers’ backs. We’re talking billions of dollars in loans—and in profits.  —KA

Bloomberg:

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.

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, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

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johnnyfarout's avatar

By johnnyfarout, November 30, 2011 at 10:40 am Link to this comment

Bloomberg is not telling the whole story. Check out Senator Sanders’ website after reading through this synopsis.
http://www.silverbearcafe.com/private/10.11/gaoaudit.html

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examinator's avatar

By examinator, November 29, 2011 at 9:26 pm Link to this comment

Now that’s scary.
Given all the pain caused by this Greenspan should be prosecuted for crimes against humanity.

Benanke should be prosecuted for professional incompetence

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By John Poole, November 29, 2011 at 3:35 pm Link to this comment
(Unregistered commenter)

Just when I thought my wincing reflex was returning- this appears. I knew about
the behind the doors deals. I still think Mr. Fish’s cartoon of MLK asking Obama
what HIS dreams were ties it all up.  Obama was a closeted plutocrat very early
and well vetted and prepped to take the baton of empire from George Bush’s
outstretched palm. So far Obama has run a pretty good leg. All you Obama dead-
enders are itching to make sure he runs a second leg. I’ve left the stands. Dopn’t
look for me to cheer him on.

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