Democracy For Sale: U.S. Banks Received $7.77 Trillion In Federal Reserve Secret Payments

I really wish the education of  inner city kids, or American workers weren’t too big to fail, unlike the banks that make up our financial industry. While the budget deficit and subsequent budget cuts continue in wake of the recent super-committee failure, said industry continues to prosper. In a newly released report by Bloomberg News, we now know that aside from the infamous TSARP tax-payer funded bank bailout. The Federal Reserve made trillions in undisclosed loans to struggling banks, and financial institutions. And how much exactly did they get, you `ask? Well, according to the report released today, all told they made off with $7.77 trillion, which in turn created a $13 billion in profits for six of this country’s largest banks.

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.”

Now if only everyone on Capitol Hill were as interested in the welfare of the American people as they proclaim to be as they are these financial institutions? Maybe then, and only then can something be done with the interest of said people in mind.

This via ThinkProgress:

In one month, Morgan Stanley — one of the most vulnerable financial companies at the time — took $107 billion in secret loans, enough to pay off a tenth of the nation’s delinquent mortgages. The loans, like those made to other institutions, were never reported to Morgan Stanley’s shareholders or the taxpayers who subsidized them.

Other banks drew similar loans without disclosing them. Bank of America, for instance, held $86 billion in public debt on the day then-CEO Ken Lewis declared his company “one of thestrongest and most stable major banks in the world.” Bank of America’s Fed borrowing peaked at $91.4 billion in February 2009; at the same time, it benefited from $45 billion in TARP loans.

And even while members of Congress were working to overhaul the nation’s financial regulatory system, the banks and the Fed kept them in the dark about the loans. Rep. Barney Frank (D-MA), one of the architects of the Wall Street reform act that eventually became law, and former Sen. Judd Gregg (R-NH), the GOP’s lead negotiator on TARP, told Bloomberg they were unaware of the specifics of such loans.

Had Congress had such information, members of both parties would have changed their votes to favor Wall Street reform, Sen. Sherrod Brown (D-OH) said. Former Sen. Byron Dorgan (D-ND), meanwhile, said knowledge of the loans could have led to a push to reinstate the Glass-Steagall Act, which prohibited banks from owning investment companies and vice versa, thereby limiting their size and vulnerability to such crises.

I find it hard to believe that all of this went down to anyone in Congress on either sides of the aisle, or even in the White House. And while this transpired, regular folks are out in the street wondering just where their next meal, and damn job was going to come from. But let the assholes on the Hill tell it, we have a serious spending problem in this country which without necessary cuts, will lead to our ultimate downfall. Yes, in the long term the budget deficit is, and can be a problem. But in the short term, as I’ve said time and time again, is the fact that long-term unemployment is killing the economy. Point blank, period: there are far too many people unemployed in America right now. And what are our beloved elected officials going to do about it? Not a damn thing but play politics and go into campaign mode as they all have. The sad truth: they don’t give a damn.

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