Forget TARP — the Real Bailout Came from the Fed
(The New American) -- by Charles Scaliger --
Since its inception almost a century ago, the Federal Reserve has enjoyed a cloak of secrecy that has grown more opaque over the years. When the economy imploded in 2008, Bernanke’s Fed swung into action behind the scenes, handing out immense sums in bailouts to a host of ailing financials, through direct loans to the very biggest banks — what Robert Litan, a former Justice Department official, called “the aristocracy of American finance.” The exact figures, however, have been a closely guarded secret, until now.
It took a Freedom of Information Act request, months of litigation, and even an act of Congress, but dogged investigators at Bloomberg News finally gained access to the figures, and, after crunching the numbers, concluded that the Fed — unilaterally and with zero congressional oversight — had doled out as much as $1.2 trillion in taxpayer monies. That's about $500 billion more than the separate, hotly contested, and widely publicized $700 billion bailout pushed through Congress at the same time.
Small wonder, then, that a firm like Morgan Stanley, widely expected during the crisis to be the next big financial to fall after the demise of Lehmann Brothers, suddenly announced, on September 29, 2008, that it had “strong capital and liquidity positions.” The markets heaved a sigh of relief and Morgan Stanley was able to hang on. What Morgan Stanley did not disclose was that it had received more than $107 billion from the Federal Reserve, a figure that, according to Bloomberg’s Bradley Keoun and Phil Kuntz, “was the source of almost all of Morgan Stanley’s available cash, according to the lending data and documents released more than two years later by the Financial Crisis Inquiry Commission.” What’s more, Keoun and Kuntz note, “the amount was almost three times the company’s total profits over the past decade.”
While Morgan Stanley got the biggest Fed bailout, other banking behemoths were not far behind. Bank of America got $91.4 billion and Citigroup took in $99.5 billion. Nor was the Fed’s largesse restricted to American banks. In confirmation of long-held (and publicly voiced) suspicions on the part of Congressman Ron Paul and other adversaries of the Federal Reserve, Bloomberg was able to determine that, of the top borrowers from the Fed, nearly half were European banks like the Royal Bank of Scotland ($84.5 billion), Switzerland’s UBS AG ($77.2 billion), and Germany’s Hypo Real Estate Holding AG ($28.7 billion, or roughly $21 million per employee). London’s Barclay’s Plc borrowed $64.9 billion and Frankfurt’s Deutsche Bank AG got $66 billion. Other European firms that benefited from the Fed’s largesse include Dexia SA (Belgium’s largest bank) and Societe Generale SA (France).
The Federal Reserve fought fiercely to keep these and many other similar bailouts secret, using the self-serving argument that publicizing the names of institutions that received bailouts would jeopardize public trust by raising the specter of insolvency...
As if loaning out such an enormous sum in taxpayer dollars to both domestic and foreign banks were not outrage enough, the Federal Reserve dramatically relaxed its own standards for collateral, in effect permitting borrowing institutions to dump junk assets as collateral for bailout monies...
It is unclear how much of the $1.2 trillion has been repaid or was adequately collateralized. But the clear lesson to be gleaned from this unprecedented window into the workings of the Fed is that the international banking cartel, anchored by central banks empowered to print money as needed to paper over financial debacles like the crash of 2008, does not scruple to put others’ money at risk. This is the ultimate form of moral hazard, in which the entire financial sector is systematically shielded from the consequences of its own follies. This “too-big-to-fail” mentality extends far and wide among the institutions that make up America’s de facto financial aristocracy. Unfortunately, it also reaches overseas to their allies in Europe, whose interests are so interlocked with those of Wall Street that our own government is willing to put American taxpayers on the hook for bankers in London, Paris, and Brussels...MORE...LINK
Chris Moore comments:
We do not live in a democracy; we live in an oligarchic plutocracy with the Federal Reserve at its center, rewarding those politicians who will grant it more power, punishing those who won’t.
Here’s how it works: the Fed controls the economic purse strings in the West. It sends hundreds of billions of dollars to cronies in the finance sector at virtually no interest, which then loans out those monies to crony corporations, special interest groups, government unions etc. willing to reinforce the scam, at nil interest.
The lot of these then funnel large chunks of money to the campaigns of politicians who will then reinforce the scam legislatively and bureaucratically.
Remember, all of this is on the credit card of the American taxpayer, whose hard work and sacrifices over the generations were what created the good credit that the Fed is now plundering through the creation of all of this fiat money, and has been for years now.
Indeed, that good credit has now been so abused that the rest of the world is increasingly no longer interested in our monopoly money, which additionally has been used to wage wars encroaching on the rest of the world’s interests.
Hence, China and others are now pulling the plug on the scam, by buying fewer and fewer U.S. government bonds, for example.
That’s what the American “budget crisis” is all about.
Those who have allowed the Fed, a corrupt cabal of low-cunning, self-serving, economic degenerates and parasites, to get its greasy fingers entirely around America’s purse strings, have essentially destroyed the American and Western economies and gone a long way towards destroying their peoples.
This destruction was both deliberate, and a consequence of post-Western, post-Christian, insatiable greed, state corruption, and liberal and Judeo-"Chrisitian" “compassion” and “tolerance” for these scheming Zionist grease balls who have their fingerprints all over the Federal Reserve system and its murderous, politically, socially and economically degenerate racket.