The Secret $7.77 Trillion Bailout

[blueduck37.livejournal.com]

Apologies if this story was posted here already; I couldn't find a post on it.

Now we've all heard the lie statement that the Tea Party began as a cultural backlash to a new President, who to conservatives was the face of a changing America that scared them protest and backlash to the 2008 TARP program even though no conservative protests occurred until early 2009.

So I assume they will join Occupy Wall St in demanding major changes to Wall St and our banking system after Bloomberg News' big story about a shadow bailout that was occurring, via the Federal Reserve. They gained this info through the invaluable Freedom of Information Act. As the article notes, "It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year."

The article discusses how this "secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger."

To me, the most anger-inducing facts are the lies and deception that surrounded this, from the Wall St. end. We learn that Wall St firms lied to investors (pretending to be healthy, while this was going on), as well as to Congress, who passed a weak reform bill with bad information.

For instance, we learn that-

Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.
....

JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation.

And that-

New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.

Free market!

Multiple Senators are quoted as saying “We didn’t know the specifics," which is great for a democracy. It notes that having all of the information of what was really going on would have likely resulted in a different (stronger?) Wall St reform bill. As it is, it doesn't really fix anything. Too big to fail still exists, etc.

If news about a secret bailout and its surrounding deception doesn't spur any action for real change, nothing will. This is why many in the OWS movement feel the system is hopeless. And that's not good for democracy either.

[PS- Bloomberg News also has another great story about how, as Bush's Treasury Secretary, Hank Paulson passed on insider info to his hedge fund friends.]

Comments

[badlydrawnjeff.livejournal.com]

This leads me to believe you are an apologist for them.

If I am wrong, prove me wrong! And I will apologize in turn.

That I've outright said that I'm perfectly willing to blame them when necessary should be more than enough. That you instead base your assumptions on what is essentially one topic we've discussed for two years is a significant problem, and when you're told you're wrong time and time again, you simply cling onto it in desperation, it becomes pathetic and sad. And it's fine to be pathetic and sad in a lot of places, but I'd prefer those places not be here.

[gunslnger.livejournal.com]

And does this mean you'd support Ron Paul's Audit the Fed legislation?

[gunslnger.livejournal.com]

Corporate bureaucracy in fact rewards failure and tends to punish competition and success.

Government bureaucracy does the same thing, so what's the difference? It's at the point where the corporation can go out of business because the consumers are the ultimate arbiter of whether the corporate bureaucracy continues. Government doesn't have that stopping point. Thus corporate bureaucracy is marginally better.

And that's not even getting into the fact that we wouldn't have such large companies if we didn't have government helping them get that large.

[politikitty.livejournal.com]

Please.

Regulatory Capture is corruption.

Lobbying might be a different kind of corruption, but a cursory knowledge of the Fed would make it pretty clear why lobbying works in Congress but not in independent agencies. A member of the Board only gets picked once for a 14 year term and cannot be re-elected. They are completely independent and well insulated from lobbying.

We're both Democrats. Don't get all bitchy with me just because I didn't drink the kool-aid when the economy hit the shitter. I understand why you've turned tail on your pro-market viewpoints. But stop pretending that makes you a true believer. You're not. You're a rabid scared convert who's understandably freaked out by this economic climate.

I get it. But I also think it leads to shitty policy, not to mention shitty behavior. I know that we disagree on this issue, but your level of dick behavior is pretty much reprehensible.

[kylinrouge.livejournal.com]

Is this another George Soros conspiracy theory?

[nevermind6794.livejournal.com]

That does not imply fault. Is the government at fault for every drive-by, since it sets federal gun law?

[nevermind6794.livejournal.com]

Is that an example of statistics that are wrong? Or did you just think copying that link made you seem clever?

[badlydrawnjeff.livejournal.com]

If the gun laws are actively causing/increasing gun deaths, one could argue that, yes. Fast and Furious comes to mind.

[the-rukh.livejournal.com]

Regulatory capture is one part of corruption. Of course, the one you are focusing on since you are moving from a position of regulation=bad first and then trying to fit events to the ideology second. Thank you for illustrating the point I made.

You know what bothers me? When people start playing the victim card because they realize their argument isn't all they thought it could be.

[blueduck37.livejournal.com]

Fair enough. For the sake of not taking up more of either of our time, I will just move on to being sad in my real life, and leave the internet alone for now.

[blueduck37.livejournal.com]

You reek of intellectual cowardice.


That's my deodorant actually. Sorry about that.

You scorn the Tea Party for not joining OWS, while refusing to consider collaberation with an organization that wants increased accountability for the Fed.

I want that accountability too. But, frankly, that's the only area of the economy that the Tea Party wants accountability. Wall St, corporations, companies that pollute, etc... all should be left to their own devices, they say. I'm not going to give credit to a movement with which I disagree 90% of the time because their central banking conspiracy fears happen to match up with my concerns about the Fed, or because Ron Paul also opposes the wars. Stuff like Social Security, workers rights, EPA regs, etc etc... they are important to me.

Instead they think that regulation increases the cost of market entry

They believe that government intervention is bad because, you know, it actually impoverishes people.

These are talking points.

You can come out of the (conservative) closet now. I came out of a closet once. It's very empowering.

PS- Yes, Democrats like Obama or Clinton have mixed records on social issues. But if your claim is that there's no difference on gay rights or a woman's right to choose or issues like that between, say, Barack Obama and Ron Paul, then I cannot take that seriously.

[blueduck37.livejournal.com]

The Santelli rant was in February of '09, not 2008, which, again, proves my point.

[nevermind6794.livejournal.com]

If it's not guns that kill people, but people that kill people, it also stands to reason that rules/laws do not kill people.

No serious person would argue that all drive-by shootings are due to our set of laws. Similarly, chalking up the magnitude of poor behavior by banks to our laws makes no sense whatsoever and totally ignores the incentives they had to take those risks.

[kayjayuu.livejournal.com]

If you recall, via wiki's timeline (since I don't), September 18, 2008 was when Paulson et al proposed the bailout, saying "we may not have an economy by Monday if we don't do this." It was defeated in the House 11 days later, passed in the Senate on October 1, signed into law on the 3rd. So in roughly two weeks of constant drum beating about "the sky is falling, the sky is falling!" we were as deer caught in the headlights of an oncoming bus. *mixes metaphors some more*

A week later, the Dow had a record tank. What was supposed to prevent a crisis had not. Still, we hoped the experts/politicians/financial geniuses were right. (Except Peter Schiff, no one listened to him, ever. And he was right.)

October 14th the Fed uses the money set aside by the Save Our Skins law. Now things had to get better.

During November our heads kept spinning as this bank failed and that bank was rescued, and the Fed continued to inject several hundred billion here and a trillion there... we lost count. Even now I have to consult a timeline to remember the horrible news that hit day after day after day. Europe begins to keen. Dow hovers above 8000 (remember that, kiddies?) Bernie Madoff is exposed. Everyone holds their breath over Christmas and tells Santa that all they want is for the world to hold together.

Surely the experts are right. It'll start turning around any day now.

Two days before the inauguration, the markets dive on worries in Europe. This has nothing to do with Obama, but it doesn't help matters. The Dow continues its decline and yes, by this time, people are thinking you know, SURELY THE EXPERTS ARE RIGHT, IT'LL TURN AROUND ANY DAY NOW.... RIGHT???

So when on February 19, 2009, Santelli had his rant smack dab in the middle of the march to Dow 6440 on March 9th (last seen in 1996 and ending a drop greater than that seen in the Great Depression -- pounded into our heads incessantly by the media day after day after miserable day), yeah, people are wondering WHY THE HELL IT ISN'T TURNING AROUND LIKE THE EXPERTS SAID.

It had nothing to do with Obama. The "tea party" comments were in response to the government then turning around and saying maybe they'd help out mortgage holders who were not paying, and the people who struggled and did the right thing all their lives and paid on time were thinking "whaaaa??". THAT'S what precipitated the "tea party" moment. NOT "we have a black president wtf?" NOT "well, you know, Dick Armey sez..."

We, as a country and as a people, were being scared to death by the doom and gloom media, the do-nothing politicians, and the very very real consequences that affected real every day people of all classes and races. And nobody was trying to stop the runaway train, all they wanted to do was wring their hands and throw money at it.

How interesting that I come across a January 9, 2009 article that references almost the exact numbers being screeched about in the OP's post -- almost $8 trillion. (http://money.cnn.com/2009/01/06/news/economy/where_stimulus_fits_in/index.htm)

By the time the president wanted still more money to "fix the problem," we'd finally come out of our daze and had. enough.

It was $8 trillion then, it's $8 trillion now, and nothing has changed. It just went down the memory hole until someone dug it out and the outrage started all over again. It should never have STOPPED, but we were utterly overwhelmed with bad news and fear.

So, how did those dates prove your point again?

[politikitty.livejournal.com]

Right.

So you have a fundamental disagreement with both the Tea Party and libertarians. So you shouldn't expect them to join OWS. It's a cheap shot to feign surprise that the Tea Party won't join OWS. Neither side is interested in a narrow campaign to end Fed intervention and get money out of Washington. They're too enmeshed with the larger partisan argument of whether the solution is more government or less.

Stop trying to pretend that they're more partisan than you because they won't approach OWS for collaboration.

My claim is that George Wallace was more liberal on race issues than most Democrats in 1958, gaining the endorsement of the NAACP and decrying the KKK. It wasn't his personal views that made him endorse segregation. It was the will of the people. The backbone of the Democratic party is increasingly minority. While that might not matter for gay rights, which has the next generation supporting it regardless of race OR party, it certainly does for abortion. It's highly plausible that in 20 years the majority of the Democratic party will not support abortion.

The people you stand with who are bigots (voters, not Barack Obama) might get to lead the party. That's the point. Right now people for whom bigotry is their biggest issue, the Republican party is the only game in town. And that doesn't hurt us much because a lot of bigots don't actually have gay marriage or abortion as their TOP issue. But again, the idea that Democrats are guaranteed to be the party against bigotry is absurd and goes against all history.

I've been pretty open that I'm a Democrat who's for free markets. Have you only just now noticed my views? I'm sorry that I don't change my opinions when it's politically convenient. But considering Democrats haven't exactly clamored to OWS, I don't think it's proof positive that I'm a closet conservative.

[gunslnger.livejournal.com]

He has nothing to do with it that I'm aware of. If he did, they might actually be accomplishing something.

[gunslnger.livejournal.com]

It's an example of someone showing how statistics are wrong.

[gunslnger.livejournal.com]

In addition, it's showing that the wages for middle America has not declined.

[gunslnger.livejournal.com]

Only a child would think that my statement was harsh.

[gunslnger.livejournal.com]

The economic information doesn't need to be infinite to still be practically impossible to handle, and it doesn't matter if it's theoretically computable by some means since it's not practically computable by today's means. Thus, it doesn't matter if it's plausible that a central pricing agent could be as capable as a plurality, because we can't practically have one right now or anytime in the geologically near future.

[blueduck37.livejournal.com]

My claim is that George Wallace was more liberal on race issues than most Democrats in 1958, gaining the endorsement of the NAACP and decrying the KKK. It wasn't his personal views that made him endorse segregation. It was the will of the people. The backbone of the Democratic party is increasingly minority.

Oy!

You insisting that the Democratic Party wasn't the party that was liberal on race issues is just as silly as implying that there's no difference between the Dems and the GOP on, say, gay rights because Clinton signed DOMA... or because since Obama was slow on the gay rights victories he's achieved and is fighting for he's somehow on the same level as the GOP which insists gay marriage will destroy American values.

While I would never make any apologies for the Southern Democrat racists of the old Jim Crow era and acknowledge that is part of the party's history, I'm pretty sure that it was Democratic Presidents like JFK and Johnson who pushed for, and then achieved, the Civil Rights Act which brought an end to Jim Crow (and is a law that the GOP opposed then and which Tea Party conservatives like Rand Paul, etc, insist even now was bad for freedom). I'm pretty sure it was Democratic President Johnson who passed the Voting Rights Act. And I'm pretty sure that it was conservative magazines like the National Review, which were publicizing editorials stating "the central question that emerges... is whether the White community in the South is entitled to take such measures as are necessary to prevail, politically and culturally, in areas where it does not predominate numerically? The sobering answer is Yes – the White community is so entitled because, for the time being, it is the advanced race."

To pretend that those facts don't matter because George Wallace's history is complicated or something is silly.

But again, the idea that Democrats are guaranteed to be the party against bigotry is absurd and goes against all history.

And if a time comes when the GOP becomes a party that supports social progress, environmental issues, labor rights, and progressive economics, I'll become a Log Cabin Republican. But that's a hypothetical.

I've been pretty open that I'm a Democrat who's for free markets. Have you only just now noticed my views?

Nope. I've known for a while. Heck, I can remember back in 2007 (http://ljdemocrats.livejournal.com/2509514.html) arguing w/ you over the minimum wage.

My point is a) you're not really a liberal (you're a conservative Democrat like a Ben Nelson... right-wing on fiscal stuff; mostly liberal on social concerns); and that b) the way you are portraying Democrats is based on a strawman.

For instance, you say: "I'm a Democrat who's for free markets"

This implies that Democrats are not for free markets. A regulated free-market is still a free market. Is it a market not free if labor has certain rights and groups with which to have a more level field against the power of their bosses? Is a market not free if it has environmental laws to keep our air, water, and communities clean and safe? Is a market not free if laws like (the now gone) Glass-Steagall Act keep a banking system from getting dangerously large? Is a market not free if there are agencies which oversee it to prevent and punish abuses?

The modern GOP insists that such a market ISN'T free, and you seem to agree. I do not. Now, you are free to believe to want whatever kind of economy you want, but don't claim that we don't believe in free markets.

[badlydrawnjeff.livejournal.com]

And focusing on so-called incentives also ignores the coercion from the government.

I'm not saying it's 100% in either direction, but the lion's share of the blame has to go with the government here. This isn't like a gun law, since gun laws generally aren't coercive rules about using your gun on other people the way banking regulations essentially tell private businesses how to run.

[badlydrawnjeff.livejournal.com]

That's fine, but you're purely speculating. At least I have some historical precedent behind my point, but I'm also not taking a decided stand on it.

[blueduck37.livejournal.com]

Absolutely.

[badlydrawnjeff.livejournal.com]

Did you get hacked here, or am I missing something?