Trillions in secret loans by the Fed reveal massive welfare for too-big-to-fail banks

August 29, 2011 | By | Reply More

Thanks to incorruptible Senator Bernie Sanders, who describes himself as a democratic socialist, the Federal Reserve has been forced to reveal information regarding loans that it tried hard to keep secret.   Here’s what we are finding, according to IPS:

The Fed provided loans to JP Morgan Chase bank to acquire Bear Stears, a failed investment firm; provided loans to keep American International Group (AIG), a multinational insurance corporation, afloat; extended lending commitments to Bank of America and Citigroup; and purchased risky mortgage-backed securities to get them off private banks’ books. Overall, the greatest borrowing was done by a small number of institutions. Over the three years, Citigroup borrowed a total of 2.5 trillion dollars, Morgan Stanley borrowed two trillion; Merryll Lynch, which was acquired by Bank of America, borrowed 1.9 trillion; and Bank of America borrowed 1.3 trillion.

I’d call it welfare for the too-big-to-fail. Phase One of the bailout was to address a legitimate liquidity crisis. Phase Two went far beyond this, and was kept secret because the public would never have consented to the above actions Here’s how Economist Randall Wray sums up Phase Two:

“But then it turned to phase two, which was to try to resolve problems of insolvency by increasing Uncle Sam’s stake in the banksters’ fiasco. That never should have been done. You close down fraudsters, period. The Fed and FDIC (Federal Deposit Insurance Commission) should have gone into the biggest banks immediately, replaced all top management, and should have started to resolve them,” Wray said.

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Category: Corruption, Secrecy

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.

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