The Federal Reserve Bank committed some $7.77 trillion in funds to major Wall Street banks during the height of the 2008 financial crisis, according to a report published by Bloomberg News November 28 through a Freedom of Information Act request.

It's unclear from the methodology explained by Bloomberg's analysis of some 29,000 Federal Reserve documents released how much overlap there is with the Government Accountability Office audit published last July that counted some $16 trillion in Federal Reserve loans to major Wall Street banks. Bloomberg's explanation of its methodology does indicate at least some overlap.

Throughout the financial crisis, Congress remained blissfully unaware that trillions of dollars were being committed by the Fed with the implicit guarantee of the U.S. taxpayer. “We were aware emergency efforts were going on,” Massachusetts Democrat Barney Frank told Bloomberg, but “we didn’t know the specifics.” Frank, who announced his retirement November 28 after the Massachusetts state legislature gerrymandered him out of his district, served as Chairman of the House Financial Services Committee at the time the bailouts began. That committee is charged with oversight of the Federal Reserve and the banking industry.

Bloomberg noted that most of the major banks receiving the below-market-rate loans made billions in profit from the Federal Reserve policies. The Federal Reserve Bank loaned funds to major Wall Street banks at rates of between 0.10 percent and 0.25 percent and at the same time banks were encouraged  to purchase U.S. Treasury bills. Two-year Treasury bills the federal government was selling were fetching more than one percent interest. The deal — borrowing at a discounted rate from one agency of the federal government and taking loans earning interest at a higher rate from another agency of government — amounted to a cash transfer from the federal government to the big banks that Bloomberg estimated netted the banks some $13 billion in profit.

The deal produced expressions of outrage from many political candidates, including longtime Federal Reserve critic Representative Ron Paul (R-Texas), who condemned the special favors being conferred on the politically connected few. Official Ron Paul for President blogger Jack Hunter, quoting a key part of the Bloomberg report, noted that "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." Rep. Paul had predicted the housing and financial crisis with astonishing accuracy as early as 2001.

The Bloomberg report noted that top Wall Street banks benefited most from the deal. "The big six — JPMorgan, Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs Group Inc., and Morgan Stanley — took 63 percent of the Fed's emergency-loan money as measured by peak daily borrowing," the San Francisco Chronicle observed November 29 of the Bloomberg data.

Ron Paul wasn't the only presidential candidate to take note of the Federal Reserve bailout's favoritism. Texas Governor Rick Perry announced November 28 that “these outrageous secret federal loans to bail out big banks are why Americans are disgusted with business-as-usual Washington.”

The evidence also reveals that Federal Reserve intervention in the market helped the "too big to fail" banks get bigger still. "Records shows that during the past five years, total assets at the largest six banks increased by almost 40% and executive compensation rose by 20% — more than $146 billion in compensation last year alone," USA Today reported November 28.

Meanwhile, some observers saw nothing wrong with the transfer of taxpayer funds to big Wall Street banks. Derek Thompson of The Atlantic wrote that the Federal Reserve was being criticized "for doing its job." Thompson stressed that the "job" of the Federal Reserve is to prevent a financial collapse, which he posited would have happened had more major banks failed.

The bailout revelations have already produced calls for congressional hearings on Capitol Hill. “Many Americans are struggling to understand why banks deserve such preferential treatment while millions of homeowners are being denied assistance and are at increasing risk of foreclosure,” Representative Elijah Cummings of Maryland, the ranking Democrat on the House Oversight and Government Reform Committee, said in a letter released to Bloomberg.com.
 

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trupatriot said:

God help us... If we don't have the intelligence to elect Ron Paul. Don't waste your vote. Learn about Ron Paul. It's a matter of survival.

November 30, 2011

LadyLiberty said:

Spread the word Yes, we need Ron Paul more than ever. We need to start persuading some of the undecideds. I have written an article to help in this realm, overcoming 10 of the most common objections to a Ron Paul presidency. Please help spread the word. We need as many eyes on this ahead of the primaries as possible. http://ladyliberty1776.blogspot.com/

November 30, 2011

mike doggs said:

more bailout Today starts another trillion out the door.. bad CDSs, to "help the E.U.. Goldman and JPM sold worthless CDSs on Foriegn exchange Euros 2009-2010, did not set the procceeds aside in reserves, claimed it in revs/profits, took hugebonuses. Now Greece CDSs not payable=voluntary..Goldman set the CDSs on Greece. The trillion+ CDSs position GS and JPM is essentially being bailed out-more Fed money-GS and JPM are the most powerful of the Advisory comittee of the Federal Reserve. This is another Bank Bailout.. it will be followed by another and another...as the Central Banks are no longer about the economyies they are supposed to represent, but about a drug like need to not pay for their investments....ever.

November 30, 2011

A. D. Palmer said:

Stand Up As Americans, we can't just sit around and let these things go on unpunished. The People, historically, had a role to serve as the check in checks and balances, along with Congress, to moderate the money supply. That ended in 1913 when the Fed was signed into existence. The point being made here is that We The People, have to stand up as a nation and hold the people who think they're "in charge" accountable for their misguided actions. The simplicity of a difference of character is the only difference between the dichotomy of the good and bad people in our nation. The good, moral people have got to stand up and say enough because this system clearly needs some reconsidering.

November 30, 2011

Mamma_Kate said:

Really? "Derek Thompson of The Atlantic wrote that the Federal Reserve was being criticized "for doing its job." Thompson stressed that the "job" of the Federal Reserve is to prevent a financial collapse, which he posited would have happened had more major banks failed." Why don't people know, and so-called journalists report, that the Federal Reserve is NOT a government agency and it's only "job" is to make money. Right now the Fed's job seems to be stealing money from taxpayers to give rich bankers so they can give themselves a bonus. The Fed is a privately owned company. Just because it's called the federal reserve doesn't make it a government agency. Are we all clear on that? Look up Dr.Paul, read Dr.Paul and then vote Dr.Paul... people really are the power in the country and that power comes from our ability to vote.....please use it!!!

November 30, 2011

marty said:

martyblueyes If the Feds job is to keep banks floating along, that is not capitalism, that is socialism. If they need to fail, let them. That is the only way to fix the system. Vote Ron Paul 2012

November 30, 2011

Zeito said:

I'm sorry to all of you ...... ....but there is no hope for all of you !!...but you still have BANKS with printing machines ready to print some pocket change for you too..., so smile..., and with your smile lose you house..., your job.., smile.., and your freedom. At the end isn't that THE BANKS are the most important and your mortgages...??? Just smile and you can start again, and again, and again, just smile...

December 01, 2011

Zeito said:

I've forgot... sorry To Mamma_Kate and the rest ... of US citizens to let you know that entire world knows your Feds are privately own and you just learned it now??? Wowwwwww/

December 01, 2011