Senator Bernie Sanders discusses the immense magnitude of the backdoor bailout

| December 3, 2010 | 4 Replies

Senator Bernie Sanders has presented some jaw-dropping facts about the financial bailout at Huffpo.  He frames his article by mentioning that back in 2009, when he asked Fed Chairman Ben Bernanke to identify the institutions that received a backdoor bailout from the Fed, he refused.   Sanders refused to accept that answer.  Instead, he worked hard to force an amendment into the “Wall Street Reform” bill, and we now know some of the startling things Bernanke refused to admit:

After years of stonewalling by the Fed, the American people are finally learning the incredible and jaw-dropping details of the Fed’s multi-trillion-dollar bailout of Wall Street and corporate America . . .

We have learned that the $700 billion Wall Street bailout signed into law by President George W. Bush turned out to be pocket change compared to the trillions and trillions of dollars in near-zero interest loans and other financial arrangements the Federal Reserve doled out to every major financial institution in this country. Among those are Goldman Sachs, which received nearly $600 billion; Morgan Stanley, which received nearly $2 trillion; Citigroup, which received $1.8 trillion; Bear Stearns, which received nearly $1 trillion, and Merrill Lynch, which received some $1.5 trillion in short term loans from the Fed.

We also learned that the Fed’s multi-trillion bailout was not limited to Wall Street and big banks, but that some of the largest corporations in this country also received a very substantial bailout. Among those are General Electric, McDonald’s, Caterpillar, Harley Davidson, Toyota and Verizon.

Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations including two European megabanks — Deutsche Bank and Credit Suisse — which were the largest beneficiaries of the Fed’s purchase of mortgage-backed securities.

Sanders has written a blistering piece in which he argues that the biggest banks padded their own executive’s pockets, refused to lend to small businesses, used near-zero interest loans they obtained from the Fed to buy Treasury securities and that they continued to gouge consumers through high credit card fees.  He suggests that those banks that received this corporate welfare could also have used this money to work out mortgage loans.   He is aghast at the conflicts of interest.

I am so relieved to know that we have at least one politician who is willing to shoot straight with the American people.

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Category: Corruption, Fraud, Politics, Secrecy, snake oil

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (4)

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  1. Jim Razinha says:

    Stunning. I'm poaching this for my Facebook contacts because this info needs as wide an audience as possible.

    Imagine! A senator whose focus is the job and not on trying to ensure that a sitting president only has one term.

  2. Jim Razinha says:

    I know who he is (brother lives in VT, but probably isn't happy he's not an Elephant), but that's a good nugget for the casual reader. I don't see the two party monopoly changing in my lifetime. There's too much economic incentive for them to allow more than a token representative or two to sit at the grown up table. I'll offer that we would be better off. I

    I also think we'd be better served by folks who are not career politicians. As with any career path, one generally gets better with experience. Politics as a profession is a nasty business, so getting better at nasty will get us? Still, we need to have career staffers who understand the processes and can package the decisions to be made. That's one reason why the military employs civilians. New guy (usually) knows how to lead, but doesn't know the mechanics if the operating machinery, thus the continuity keeps it going while working to implement the changes in direction. So you get change and stability at the same time.

    • Erich Vieth says:

      I can't think of a more insidious system for discouraging smart good-hearted people to run for national office than our current system. Or perhaps the problem is that it turns idealistic people into beasts. The money pressures caused by the reelection cycle corrupts most of them, most of the time. The story of Ted Kaufman is illustrative. He was only going to finish out Joe Biden's term; he was not planning on ever running for office. It was not a coincidence that he spoke up loud and clear against Wall Street, and he was one of the few Senators willing to do so.

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