Ah, free-market capitalism — the economic system that works best, provided that one infuses $8 trillion to stave off total collapse. The Atlantic Wire writes:
Remember the $700 billion Troubled Asset Relief Program with which the federal government came to the rescue of faltering banks in 2008? Well, according to a Bloomberg report, that was just a fraction of the financial help the Federal Reserve Bank wound up doling out to troubled lenders. The real total was reportedly closer to $8 trillion, after you add up benefits outside TARP, including emergency loans given at below-market rates:
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” 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.
Bloomberg came up with that number after reviewing “29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions.” Bloomberg adds, “The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day.” That’s nearly twice the amount made public in TARP.