Comments: Congress's $700 Billion TARP Bailout Was a Sideshow

I'm pretty sure Taibbi has ranted about the Fed's bottomless coffers, their acceptance of phony-baloney MBSs as collateral, and the trillions given away in non-TARP programs that no one pays any attention to, so it's not exactly fair to say "no one" in the media has been saying this.

Posted by saurabh at November 27, 2011 10:50 PM

Well, I said "essentially." Plus I think literally no one has made the commercial paper-WMD connection.

Posted by Jonathan Schwarz at November 27, 2011 10:56 PM

The fed can buy what it wants, sell what it wants, invest in what it wants, no law against it. WE're printing OUR way to 700 trillion and funneling it into the banks through AIG. THAT'S WHY U&I bought the biggest and bestest insurance giant to balance the books. I'd love a look at them myself.

Posted by Mike Meyer at November 27, 2011 11:31 PM

I am not so sure that I didn't read it here...that since we now know the FED loaned 16 trillion...why didn't they simply pick up the costs of TARP? That is the real question. Why make us do that? Just a distraction....nah I've thought all along it was a means to co-opt all of Congress which they already had in their pockets. Make them culpable and force Congress to keep their mouths shut while they stole tax money from idiots. Pretty sinister.

Posted by Frankenstein Government at November 28, 2011 03:13 AM

Jon--I don't have time to play long, so where's the information disclosed by the Fed at the link you provide, because I'd love to see it. I got claustrophobic when I clicked on it and didn't see what you were referring to.

You're right that "democratic legitimacy" is code, but also remember that although capitalists all eat the poor, that isn't their entire diet--they also eat each other. They all have lobbyists and make contributions to political campaigns and use "democracy" as they can, and just as the big--like AIG and Lehman--can collapse suddenly, others can grow a lot suddenly in periods of volatility and become powerful fast. (Meet the new boss, same as the old boss, except the new boss remembers how you tried to screw him)

Bernanke was perhaps expressing that he did not want to be swimming in the middle of a bunch of sharks in a feeding frenzy--better to let those guys in Congress do that.

Posted by N E at November 28, 2011 06:48 AM

If the Fed can refuse to tell Congress what it is doing, then who is really in charge of the country?

Posted by seth at November 28, 2011 08:45 AM

Thanks for explaining this Jon.

I'm more than a little confused by this new (from the Bloomberg link - $1.3 Trillion) number. Didn't the GAO release a report this past July stating that the amount loaned to banks was $16 Trillion?

http://publicintelligence.net/gao-federal-reserve-16-trillion-emergency-bailout-loans-audit-report/

Also, not that you're responsible for their reporting, but the Bloomberg story says that the banks "reaped" $13 Billion by taking advantage of below market rates. That seems awfully low compared to the amount of money they had access to.

Posted by Bruce F at November 28, 2011 10:59 AM

Bruce,

What I have heard that accounts for that $13 Billion figure was this: the Fed lent enormous sums of money to the banks at .25% interest, and the banks turned around and bought T-bills with it at about 2% interest. They made their money on the interest rate differential. Pretty sexy. They could count the T-bills as assets, part of the capitalization of the bank, while making money off of the interest on money they were pretty much handed - to, of all things, raise their capitalization. Of course, they made this money out of the taxpayers' hide. Whoo hoo. So even when they have massively fucked up, their friends down at the Fed banking cartel, after saving their hash from the logical consequences of their abysmal stupidity, engineer it so that they exact even more money from all of the rest of us, laundered through the front-room operation of the banking cartel. Sweet.

N.B.: If my understanding is incomplete in part or in whole, somebody else please take a whack at it. Not me, please. I'm only the oboe player.

Posted by JerseyJeffersonian at December 6, 2011 06:28 PM

Its a printing game JerseyJeffersonian. YOU are being PRINTED into saying what IS YOURS actually belongs to someone else. And its ALL done with a printing press.

Posted by Mike Meyer at December 6, 2011 08:40 PM