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Secret Fed Loans gave banks 13 billion

details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

This is the part those who try and defend this **** by saying it's been paid back refuse to see. There are so many negative aspects here it would take paragraphs to even begin covering it all.

If it's paid back, it's paid back on the backs of the taxpayers and as of yet, nobody has been held accountable for much of anything.
 
iliveonramen said:
Secret Fed Loans Gave Banks $13 Billion - Bloomberg

Bloomberg news. The bailout was bigger than TARP
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This title is misleading. The Fed didn't just fork over $13 billion, Bloomberg estimates that they were able to add $13 billion (across 190 banks) to their bottom lines as a result of the access to cheap credit. I posted this in another thread in relation to the "$16 trillion" myth.

I would like to see how they calculated the $13 billion number. I am almost finished with the entire article and haven't seen any mention of it.

Some quotes form the article:

The Fed has been lending money to banks through its so- called discount window since just after its founding in 1913. Starting in August 2007, when confidence in banks began to wane, it created a variety of ways to bolster the financial system with cash or easily traded securities. By the end of 2008, the central bank had established or expanded 11 lending facilities catering to banks, securities firms and corporations that couldn’t get short-term loans from their usual sources.

The Fed has said that all loans were backed by appropriate collateral. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland.

A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger
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The article is critical of the program as it shows that all the recipients combined added $13 billion to their bottom lines as a result of the cheap credit available from the Fed's Term Auction Facility. Note the quote from the professor of international economic policy about how the program generated record profits for the Fed (all of which are returned to the taxpayer). don't attempt to paint the entire concept of the Federal Reserve providing liquidity to the financial system as some sort of free money via secret bailouts for the entire world. The TARP program was truly a (successful) bailout because it injected capital in major banks by purchasing preferred equity. The Fed's Term Auction Facility made loans at lower interest rates to banks all over the world, in addition to employing currency swaps with the ECB; part of it's core purpose and something it has done since it was established in 1913. The sheer size of the program in 2008 is due to the extreme global credit crisis completely unprecedented in modern financial history. If anything you can say the program (like TARP minus Freddie/Fannie/AIG) resulted in a net profit to the US taxpayer, ignoring inflationary pressures of course (which are currently subdued but remain a threat in the future).
 
Helix said:
hey, the poor banks were victims of government here. they all wanted to do the honorable thing and go bankrupt, but evil government forced them to remain solvent.

the good news is that all we have to do is remove a bunch more regulation to fix the problem permanently.
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We have regulations that would at least curb some of the outrage by main street if the government would enforce it. Sarbanes/Oxley. That the government refuses to shows where this was and is a problem of incestous proportions.
 
1Perry said:
If it's paid back, it's paid back on the backs of the taxpayers and as of yet, nobody has been held accountable for much of anything.
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Every single dollar the Fed pays to anyone/thing is paid on the backs of taxpayers. Not as if Washington has a Money Tree Forest...well, except I guess import taxes. Punish a corporation with fines? Backs of taxpayers. Tax the coal industry? Backs of taxpayers. We pay for all of it.

As to your last thought above, Congress should be ashamed.
 
1Perry said:
If it's paid back, it's paid back on the backs of the taxpayers and as of yet, nobody has been held accountable for much of anything.
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We don't refuse to see this, we just like to respond with facts when people think that the US taxpayer footed a $700 billion loss. Obviously, accountability, moral hazard, and bad precedence are all intangible costs of the rescue of the financial system but it doesn't mean we should ignore the benefits either. Keep reading and you will get to the "Core Function" paragraph:

“Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs. “Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses.”

The Fed has said that all loans were backed by appropriate collateral. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland.

The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view. The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak
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What are the 99%ers protesting again? /sarcasm
 
MaggieD said:
Every single dollar the Fed pays to anyone/thing is paid on the backs of taxpayers. Not as if Washington has a Money Tree Forest...well, except I guess import taxes. Punish a corporation with fines? Backs of taxpayers. Tax the coal industry? Backs of taxpayers. We pay for all of it.

As to your last thought above, Congress should be ashamed.
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I understand your point but we are speaking ungodly numbers here to try and keep the previous bogus numbers afloat. This is why I understand the pissed off people of OWS.

The markets were grossly inflated. Rather than allow them to find a natural sustainable figure the Fed's only concern was in getting them back up to the previous highs so all their cronies were made whole again.

Nothing was done to make those struggling on main street whole other than some crumbs. The Fed believes that Wall Street = economy. I disagree. Very strongly. Wall Street is now just pushing papers trying to create the next bubble.
 
Audit the Fed. and then jail Bernenke and Geithner.

j-mac
 
1Perry said:
I understand your point but we are speaking ungodly numbers here to try and keep the previous bogus numbers afloat. This is why I understand the pissed off people of OWS.

The markets were grossly inflated. Rather than allow them to find a natural sustainable figure the Fed's only concern was in getting them back up to the previous highs so all their cronies were made whole again.

Nothing was done to make those struggling on main street whole other than some crumbs. The Fed believes that Wall Street = economy. I disagree. Very strongly. Wall Street is now just pushing papers trying to create the next bubble.
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What should our government do? Allow Wall Street to crash as well? The government allowed Americans' largest investment of their lives to get wiped out. (Real estate) Now they should sit and do nothing while their 401K's, pension funds, IRA's and other investment vehicles go down the toilet?
 
Jetboogieman said:
Not that I'm very happy with them either, but on what Charge?
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Start with currency manipulation, and go from there. I am sure there are people qualified with the knowledge of the laws surrounding this sector of our government to make the appropriate charge.


j-mac
 
Rhapsody1447 said:
We don't refuse to see this, we just like to respond with facts when people think that the US taxpayer footed a $700 billion loss. Obviously, accountability, moral hazard, and bad precedence are all intangible costs of the rescue of the financial system but it doesn't mean we should ignore the benefits either. Keep reading and you will get to the "Core Function" paragraph:
Click to expand...

Yes, it's full of ****. Absolute ****. PLease allow me to rephrase.

Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs.

You can not stabilize bubbles that have been created out of nothing for the most part. It's money we didn't have pumped into the markets and it crashed as it has to. The Fed believes they must prop up these inflated numbers. That's great for those who profited greatly by these bubbles and bad for main street.

No, we needed to allow things to find their natural bottom. Yes, that would have hurt temporarily, but we are only creating a system that is going to be forced to eat itslef it with more and more and more money pumped into it to keep it afloat. Yes, Goldman Sachs will be able to continue to pay out their multi million dollar bonuses but it will be a the cost to main street of $5.00 (and rising) gas and $2.00 (and rising) loafs of bread.
 
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MaggieD said:
What should our government do? Allow Wall Street to crash as well? The government allowed Americans' largest investment of their lives to get wiped out. (Real estate) Now they should sit and do nothing while their 401K's, pension funds, IRA's and other investment vehicles go down the toilet?
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Funny that. The government had no problem with allowing main street to "lose" so much of their wealth in housing but they made sure the big banks lost nothing. Yes, it's a bitter pill to take but one we are going to have to take. Look at Europe. "We have solved the problem" "Europe's problems escalate". "We have solved the problem" "Europe's problems escalate".

We can NOT simply inflate ourselves out of this problem and not create an absolute mess for main street. Much of your 401K was built on the grossly inflated markets. Yes, you are going to lose there. Why shouldn't you?
 
The sheer size of the program in 2008 is due to the extreme global credit crisis completely unprecedented in modern financial history.
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Sure...I'm not against the bailouts, a collapse of the banking system would of been (in my opinion) the end of the modern US economy.

It's not about return to the US government. It's not about the money eventually being paid back. It's the issue of large banks having unlimited capital at a very cheap price via the US government. It's the fact it's done secretly and only has come to light via journalists fighting to get this information. It's the issue that we've virtually created "too big to fail" banks that are virtually national banks ran for profit for private interests. The idea that the financial industry is in any way a "private" entity is laughable.
 
j-mac said:
Start with currency manipulation, and go from there. I am sure there are people qualified with the knowledge of the laws surrounding this sector of our government to make the appropriate charge.


j-mac
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Being genuine here, trying to find laws on the books against currency manipulation and can't find any except some vague WTO and IMF policies that you wouldn't want to apply to your country anyway.
 
don't attempt to paint the entire concept of the Federal Reserve providing liquidity to the financial system as some sort of free money via secret bailouts for the entire world.
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It doesn't take much "painting". Using the term "providing liquidity" doesn't change anything. That is the goal of people in the Fed but the action taking provides virtually free money to large US banks.
 
iliveonramen said:
It doesn't take much "painting". Using the term "providing liquidity" doesn't change anything. That is the goal of people in the Fed but the action taking provides virtually free money to large US banks.
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It was more than free. The Fed was then paying interest to the big institutes on this money. So the Fed gave them money for nothing and then paid them interest on it.
 
So...there is maybe a REASON banks/brokers have been greasing political campaigns (just like all the 'green' energy companies)? I am shocked I tell ya.
 
1Perry said:
Funny that. The government had no problem with allowing main street to "lose" so much of their wealth in housing but they made sure the big banks lost nothing. Yes, it's a bitter pill to take but one we are going to have to take. Look at Europe. "We have solved the problem" "Europe's problems escalate". "We have solved the problem" "Europe's problems escalate".

We can NOT simply inflate ourselves out of this problem and not create an absolute mess for main street. Much of your 401K was built on the grossly inflated markets. Yes, you are going to lose there. Why shouldn't you?
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You're right, actually. Wipe out taxpayers' home equity. But save the big banks. Trouble is, once the first happened, the second would have been a true death blow. Where I think our government went wrong was in not putting a lot more strings on their bailouts...one of the most important being multi-million-dollar bonuses. Don't know how they could've done that...but in hindsight, Main Street would have reacted better.
 
Jetboogieman said:
Being genuine here, trying to find laws on the books against currency manipulation and can't find any except some vague WTO and IMF policies that you wouldn't want to apply to your country anyway.
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Well, I am not a lawyer, nor am I in government. I am just a citizen that pays taxes that watches MY money go for this crap, and thinks there should be something in place to prevent this kind of stuff. Unless you think it is perfectly fine for our government to just do what ever they wish to do with your money without accountability.


j-mac
 
j-mac said:
Well, I am not a lawyer, nor am I in government. I am just a citizen that pays taxes that watches MY money go for this crap, and thinks there should be something in place to prevent this kind of stuff. Unless you think it is perfectly fine for our government to just do what ever they wish to do with your money without accountability.


j-mac
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I never said that, I was merely pointing out that unfortunately there is no way to charge them with anything at the present time.

One reason why people like Ron Paul gets so irate is because the Fed Reserve has extraordinary powers that aren't really legal or illegal. It's a massive grey area of the Federal Government without a whole lot of oversight.
 
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