Tracking the Fed's $1.2 trillion Wall Street bailout

[ProSense]

Tracking the Fed's $1.2 trillion Wall Street bailout

by Joan McCarter

Through Freedom of Information Act requests, netting some 29,000 pages of previously secret documents, Bloomberg has discovered the unprecedented and astounding scope of Federal Reserve action in staving off a depression during 2008's financial crisis, loaning $1.2 trillion, an amount "more than the total earnings of all federally insured banks in the U.S. for the decade through 2010."

Here's a snapshot from an interactive graphic they created tracking fed loans to banks.



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From the Bloomberg article at the first link:

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The $1.2 trillion peak on Dec. 5, 2008 -- the combined outstanding balance under the seven programs tallied by Bloomberg -- was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.

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In December, in response to the Dodd-Frank Act, the Fed released 18 databases detailing its temporary emergency-lending programs.

Congress required the disclosure after the Fed rejected requests in 2008 from the late Bloomberg News reporter Mark Pittman and other media companies that sought details of its loans under the Freedom of Information Act. After fighting to keep the data secret, the central bank released unprecedented information about its discount window and other programs under court order in March 2011.

Bloomberg News combined Fed databases made available in December and July with the discount-window records released in March to produce daily totals for banks across all the programs, including the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, Commercial Paper Funding Facility, discount window, PDCF, TAF, Term Securities Lending Facility and single-tranche open market operations. The programs supplied loans from August 2007 through April 2010.

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[pnorman]

1. K&R!

n/t

[banned from Kos]

2. Of that $1.2 trillion in emergency LOANS - the taxpayer earned $125 billion

in interest. (over a two-year time frame + the GSE bond interest paid). I realize the LOANS were a shorter duration.

http://latimesblogs.latimes.com/money_co/2011/01/federal-reserve-2010-record-profit-financial-crisis-intervention.html

Great graphic, by the way.

[girl gone mad]

3. Many of the loans were ultimately 'paid back' with other bailout funds.

As of now, our outstanding bank and mortgage support amounts to over $1.5 Billion.

From http://www.prwatch.org/news/2011/08/10924/money-still-owed-federal-bailout-15-trillion-still-owed-treasury-federal-reserve">PR Watch:



If these banks had discovered a cure for cancer or invented some amazing new technology which led directly to growth and prosperity for the nation, or even if they had invested in such innovation, you might have a valid point in arguing that everything's okay now since we were "paid back". However, modern banks don't work that way. Virtually every penny they earned came from lowering the interest rates paid to depositors, raising fees, speculating in oil and commodities markets, front running small investors with HFT, earning interest on their free reserves, etc. In other words, the money they used to pay us back was largely extracted from the middle class through this economically parasitic behavior. And even after all of that, we are still on the hook for Trillions.

[Supersedeas]

5. Interesting how that works---we pay twice...isn't it time for a Mortgage Payment Holiday

For the taxpayer contributions toward saving the Banks.

[applegrove]

4. No government is ever going to make the banks truly pay for what they have done for two reasons:

One, when deregulation happens in a market. a very few huge corporations are left and a whole hoard of smaller ones but the mid sized ones are destroyed. So with banking being deregulated around the world now, these next 50 years, will see whether American banks can end up on top. Now is the time. If they were left to fail or suffer huge losses they would lose in this worldwide competative race that is going on as we speak. The second reason is that when oil prices hit $200 a barrel nobody is going to be buying 'civil' goods because the transportation costs will be so high. The American government want the USA to not be in manufacturing at the time but in industries that don't require a lot of oil in transportation costs. Those industries? Software, pharmaceuticals, technology and BANKING.