More details on the $16 trillion backdoor bank bailout

Today I received a mass emailing from Alan Grayson. I had previously heard about this backdoor bailout by reviewing an article by Bernie Sanders and see here. Nonetheless, I hadn't before seen the details of massive loans made by the Fed to banks and non-banks. These numbers are mind-boggling. Click on Grayson’s link to the Federal Reserve report (below) with the outrageously sterilized title: “FEDERAL RESERVE SYSTEM: Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance.” Then follow his road map in order to see the problems with your own eyes. I've printed Grayson's entire mass mailing below. Consider that the Fed created $16 TRILLION and distributed much of it to foreign banks. This amount is 20 times bigger than the publicly disclosed TARP, yet the American People were never given a chance to know about this or have their representatives vote on it. The banks tried to keep this backdoor bailout secret, but it took Senator Bernie Sanders of Vermont, neither Democrat nor a Republican (he is a democratic socialist), to raise hell in order to force the Federal Reserve to account for this backdoor bailout. And back then, it was believed that this backdoor bailout was "only" $2.2 trillion. One more thing: The total annual tax receipts of the United States are “only” $2 trillion. But, of course, based on the news media, you would think that the most important things going on concern Michael Jackson’s doctor and Herman Cain’s sex life. -- Dear Erich, I think it’s fair to say that Congressman Ron Paul and I are the parents of the GAO’s audit of the Federal Reserve. And I say that knowing full well that Dr. Paul has somewhat complicated views regarding gay marriage. Anyway, one of our love children is a massive 251-page GAO report technocratically entitled “Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance.” It is almost as weighty as that 13-lb. baby born in Germany last week, named Jihad. It also is the first independent audit of the Federal Reserve in the Fed’s 99-year history. Feel free to take a look at it yourself, it’s right here. It documents Wall Street bailouts by the Fed that dwarf the $700 billion TARP, and everything else you’ve heard about. I wouldn’t want anyone to think that I’m dramatizing or amplifying what this GAO report says, so I’m just going to list some of my favorite parts, by page number. Page 131 – The total lending for the Fed’s “broad-based emergency programs” was $16,115,000,000,000. That’s right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank. Pages 133 & 137 – Some of these “broad-based emergency program” loans were long-term, and some were short-term. But the “term-adjusted borrowing” was equivalent to a total of $1,139,000,000,000 more than one year. That’s more than $1 trillion out the door. Lending for these programs in fact peaked at more than $1 trillion. [More . . . .]

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Making banks pay for their secret $7 trillion free ride

Eliot Spitzer offers "5 Ways to Make Banks Pay for Their Secret $7 Trillion Free Ride." Here's the problem:

During the deepest, darkest period of the financial cataclysm, the CEOs of major banks maintained in statements to the public, to the market at large, and to their own shareholders that the banks were in good financial shape, didn’t want to take TARP funds, and that the regulatory framework governing our banking system should not be altered. Trust us, they said. Yet, unknown to the public and the Congress, these same banks had been borrowing massive amounts from the government to remain afloat. The total numbers are staggering: $7.7 trillion of credit—one-half of the GDP of the entire nation. $460 billion was lent to J.P. Morgan, Bank of America, Citibank, Wells Fargo, Goldman Sachs, and Morgan Stanley alone—without anybody other than a few select officials at the Fed and the Treasury knowing. This was perhaps the single most massive allocation of capital from public to private hands in our history, and nobody was told. This was not TARP: This was secret Fed lending.

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We are moving from the few and big to the small and many

At Orion Magazine, Bill McKibben has noted a trend in energy production, information, health care, banking and (believe it or not) farming:

[W]e’re moving, if we’re lucky, from the world of few and big to the world of small and many. We’ll either head there purposefully or we’ll be dragged kicking, but we’ve reached one of those moments when tides reverse.
This movement to the small and many is a democratic movement, and McKibben's comment about the "tides revering" refers to the fact that "small and many" will be resisted by those who can profit by confiscating and retaining large-scale control:
In our world, most of those people are not actually persons—we call them corporations. But their power over our democracy is very real, and on the farm and on the trading floor and in the hospital ward they’re doing their very best to block the transitions we need. Their money, earned under the old bigger-is-better paradigm, gives them great power to block change: just look at how skillfully the fossil fuel industry has used the Tea Party to stifle legislation that would speed the transition to renewable energy. Watch Big Ag write the next Farm Bill—it won’t be pretty.

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Mark your calendars for the Anti-Fourth-of-July

Mark your calendars for The Fourth-of-January, the antipode of The Fourth-of-July. The Fourth-of-January will be a new national date of remembrance.  This new occasion will be about the United States of America, but there won't be any fireworks and it's not going to be a happy occasion. In fact, as happy as the Fourth-of-July is, the Fourth-of-January will be the diametric opposite. Citizens will somberly recognize the Fourth-of-January by gathering together to watch mock funerals wind through their city centers, where they will mourn the death of democracy. An American flag will be placed prominently on the hearse, serving as a symbol of the deceased. On the Fourth-of-January, American citizens will actually bury these American Flags to recognize the fact that ordinary citizens of the United States have no  meaningful input in how their federal government is run. At the destination of the funeral procession, citizens will carve these words onto the tombs:

Here lies Old Glory, destroyed by Citizens United and by the unwillingness politicians to pass a Constitutional Amendment and enabling laws to remove private money from the American political system.

The Fourth-of-January will be a day when people consciously refrain from reading The United States Constitution, lest they become deluded that federal politicians are public servants of ordinary citizens.  It will be a day when, instead, mourners read proclamations that the existence of vast amounts of money in the political system has made it impossible to meaningfully debate even the simplest of political issues. It will be a day when Americans recognize that big corporate money has turned America's politicians into  psychopaths.  It will be a day when Americans remind themselves that their every year their politicians spend more tax dollars to air-condition soldiers' tents in the Middle East than they allocate for the total budget of NASA, to explore the mysteries of outer space. The Fourth-of-January will be a date when Americans consider  renaming of all of their major holidays based on fact that quest for corporate profits now dominate all celebrations, and that America's news media celebrates this fact. On the Fourth-of-January, Americans will recognize that, contrary to the will of the People, America has become unstoppably addicted to warmongering, and that it has become a nation that doesn't treasure safe food, medicine, chemicals, air and water.  It has become a nation that allows big banks, fossil fuel companies, telecoms and insurance companies to write national laws that cause massive financial damages to the People. On this new Day of Remembrance, Americans will pause for a moment of silence to recognize the brutalizing and almost unstoppable financial and political power of America's corporate-military-prison-industrial-Complex. The Fourth-of-January will recognize that laws passed contrary to the wishes of the majority of citizens have resulted in sub-standard schools, catastrophic national debt, state sponsored torture, spying on citizens, governmental secrecy and abuses inflicted on citizens and journalists who are attempting to exercise their Constitutional rights.  On the Fourth-of-January Americans will recognize that their highest court has become deaf to the needs of the People, and that the "rule of law" is rapidly becoming available only to those of significant financial means. The Fourth-of-January is a day when we warn our grade school children that much of what they are reading in their American civics textbooks is stunningly false. The Fourth-of-January will be celebrated every year unless and until the corrupting force of private money is removed from the American political system. -- [Photo credits:  Derivative work funeral photo by Erich Vieth, incorporating flag photo by Tarajane at Dreamstime.com (with permission) and Original funeral photo, which is a public domain work.  Corporate flags photo by Erich Vieth, photo taken at the 2011 downtown St. Louis Fourth of July celebration].

Continue ReadingMark your calendars for the Anti-Fourth-of-July