Tag Archives | Federal Reserve

Revealed: See Who Was Paid Off In The AIG Bailout

Ryan Grim and Shahien Nasiripour write on the Huffington Post:

A key question at the heart of the controversial bailout of AIG is just how much money the government lost. The Federal Reserve and Treasury Department have worked to keep that number secret and to conceal who was on the winning end.

An unredacted document obtained by the Huffington Post list the damage in detail. Goldman Sachs alone, for instance, got $14 billion in government money for assets worth $6 billion at the time — a de facto $8 billion subsidy, courtesy of taxpayers.

The list was produced as part of a congressional investigation led by the House Oversight and Government Reform Committee into the federal bailout of AIG…

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Federal Reserve Seeks to Protect U.S. Bailout Secrets

Federal ReserveDavid Glovin and Thom Weidlich writes on Bloomberg:

The Federal Reserve asked a U.S. appeals court to block a ruling that for the first time would force the central bank to reveal secret identities of financial firms that might have collapsed without the largest government bailout in U.S. history.

The U.S. Court of Appeals in Manhattan will decide whether the Fed must release records of the unprecedented $2 trillion U.S. loan program launched after the 2008 collapse of Lehman Brothers Holdings Inc. In August, a federal judge ordered that the information be released, responding to a request by Bloomberg LP, the parent of Bloomberg News.

“This case is about the identity of the borrower,” said Matthew Collette, a lawyer for the government, in oral arguments today. “This is the equivalent of saying ‘I want all the loan applications that were submitted.’”

Bloomberg argues that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money.

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Fed Posts Record Profit for 2009

Seal of Federal Reserve SystemReported on the AP via Yahoo News:

The Federal Reserve generated record profits last year, reflecting money made off its extraordinary efforts to rescue the country from the worst economic and financial crisis since the 1930s.

The central bank announced Tuesday it logged a record windfall of $52.1 billion. Of that total, a record of $46.1 billion gets turned over to the Treasury Department.

It marks both the biggest profit and payment to Treasury on records dating back to 1914, when the Fed began operating. The previous record payment turned over to the Treasury — of $34.6 billion — was registered in 2007. In 2008, the Fed reported a payment of $31.7 billion.

The Fed’s efforts to end the crisis are separate from the $700 billion taxpayer-funded financial bailout program authorized by Congress in 2008 and overseen by the Treasury Department.

Originally set up to shore up banks, money from the publicly-derided program also has been doled out to rescue other types of companies, including General Motors, Chrysler and GMAC.

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Federal Reserve Smackdown: Bunning vs Bernanke

I spent a good part of today driving from New York to Philadelphia and back. It was a fantastic opportunity to listen to Ben Bernanke being grilled by the United States Senate and struggling to defend his record as Chairman of the Federal Reserve during a period that has been likened to the Great Depression. The very best part was a blistering attack on Bernanke by Senator Jim Bunning, a man who is definitely not afraid to tell it like it is. Respect Mr. Bunning! Felix Salmon obviously enjoyed it too, writing on his Reuters blog:

I wonder what it was like to be Ben Bernanke today, on the receiving end of an absolute lashing from Senator Jim Bunning. Here’s a taster:

Chairman Greenspan’s attitude toward regulating banks was much like his attitude toward consumer protection. Instead of close supervision of the biggest and most dangerous banks, he ignored the growing balance sheets and increasing risk. You did no better. In fact, under your watch every one of the major banks failed or would have failed if you did not bail them out.

Bunning then quoted Bernanke’s own words from his own confirmation hearing, when he said that “no bank is too big to fail”. No, Bunning wasn’t laughing either:

Rather than making management, shareholders, and debt holders feel the consequences of their risk-taking, you bailed them out. In short, you are the definition of moral hazard.

This is the sort of parliamentary rhetoric which we Brits are quite used to, but which is electrifying in the normally-staid confines of the US Senate. Good for Bunning for taking the gloves off.

Amen.

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Audit The Fed Effort Wins Support From An Unusual Coalition

fed_sealvia HuffPo:

“An unusual coalition of progressive economists, labor leaders, and bloggers has decided to fight back against a congressional amendment that would allow the Federal Reserve to continue operating in secrecy.”

November 18, 2009

House Financial Services Committee
2129 Rayburn House Office Building
Washington, D.C. 20515

Dear Chairman Frank, Ranking Member Bachus, and Members of the Committee,

During the past two years, the Federal Reserve dramatically changed its operating procedures. Instead of simply setting interest rates to influence macroeconomic conditions, it rapidly acquired a wide variety of private assets and extended massive secret bailouts to major financial institutions.

There are still many questions about the Fed’s behavior in these new activities, including potential cronyism and favoritism in its distribution of many trillions of dollars. As the Special Inspector General for the Troubled Assets Relief Program recently wrote about their bailout of AIG, the Fed’s “strategy to pursue concessions from counterparties offered little opportunity for success, even in light of the willingness of one counterparty to agree to concessions.”

The Federal Reserve balance sheet expanded to more than $2 trillion, along with implied and explicit backstops to Wall Street firms that could cost even more.

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“Bones” in the Money Pit

By Robert Singer

“Things do not happen. Things are made to happen.”—JFK.

Our consumer society didn’t just happen, it was planned. Not in 1910, or 1954, but in the year 1832, the year William Huntington Russell and fellow classmate Alphonso Taft at Yale University founded the Skull and Bones society, a branch of the Bavarian Illuminati.

According to most of the available biographical data on its early members, the money required to sustain the secret order’s campus affairs and its broader role in placing its members into key positions of influence upon their graduation from Yale was derived from the opium trade in the Far East.

Members, known as “Bonesmen,” include Rockefeller, Kuhn, Loeb and Morgan all connected to the House of Rothschild’s global financial empire. They are founders of the Federal Reserve, the Bank of England, France, and Germany or, for that matter, any central bank anywhere in the world.… Read the rest

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Silver, But No Silver Lining

By Robert Singer

The end of our consumer society is on the horizon, which should be no surprise to anyone who took Economics 101. Do we really expect to spend our way out of this mess by buying and selling each other useless cheap stuff from China?

As the financial collapse gathers steam, gold and silver oracles like Butler, Friedman, Morgan and Turk who have been predicting for years the launch of the price of silver to the moon will see their prophecy fulfilled, but a celebration is not in order.

Being wealthy during the last 60 years of unprecedented prosperity at the expense of the Third World and the environment is one thing, but profiting from a bull market in silver when millions of hungry Americans are living in tent-cities next door is quite another.

A default at the Comex that will ignite the explosion in the price of silver and gold is in progress.… Read the rest

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