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

[underlankers.livejournal.com]

What he's describing is not central planning so your whole point is irrelevant.

[gunslnger.livejournal.com]

Since your definition of central planning is screwy, your objection is ignored.

[underlankers.livejournal.com]

Since my definition of central planning comes from economies that actually try centralized planning with state bureaucracies and concentration camps for people that attempt to go outside it, yes, that is a certain definition of screwy. It's called debating honestly with an honest definition of a word related to what it actually means.

[gunslnger.livejournal.com]

Ok, so you use a limited definition of the word so that you don't have to debate honestly. I can accept that.

[underlankers.livejournal.com]

No, I'm using reality and what words actually mean. What you do is morally bankrupt sophistry for intellectually dishonest purposes. You also don't debate, what you do is sophistry that has no more substance to it than a bald man scraping two hairs over his head. Your "argument" here rests on a fallacious definition that by comparison indicates government regulation and central planning are the same thing. This is a coompletely false definition, resting on a complete. willful misunderstanding at best of what centralized planning really is.

The real version is done by totalitarian dictatorships. What you call it, and what it actually is, are more different than a pebble and the moon. And incidentally, when are you going to "argue" with more than one line to your post? At least you've yet to call me illiterate, just refusing to debate dishoonestly where I've explained my reasoning, and stated bluntly what it is that I think. In short there is someone who has a conginental refusal to engage in anything approximating a debate on what central planning is and is not, but it it is not me.

[gunslnger.livejournal.com]

I don't argue with you because you don't comprehend what people write, you make it be whatever you want them to be saying. Over and over and over.

[underlankers.livejournal.com]

Frankly you don't "argue" with anyone, you just use personal insults and obfuscation to cover up that 100% of the time you have nothing approaching an argument, just the particular blend of ad hominem and trolling that marks a good deal of commentary on this community on both sides. I keep bringing up command economies in a discussion of command economies and you haven't the ability or the will to discuss command economies despite brining up command economies. In short when it comes to sppecifics and facts, you have nothing whatsoever to contribute. You're welcome to have the last word.

[gunslnger.livejournal.com]

Yes, you keep trying to discuss whatever you want to discuss regardless of what was actually said by the other party.