"You want to screw up your economy? Screw up your government."
So now we know, thanks to Sen. Bernie Sanders, some of the sordid details of the Federal Reserve Board’s “come and get it” policy. The Fed opened its vaults—our vaults—to the tune of $3.3 trillion in liquidity and $9 trillion in short-term low-interest loans to some of the world’s biggest banks. These included giant foreign banks, as well as Citigroup and Bank of America and other large domestic financial institutions.
Morgan Stanley got nearly $2 trillion. Citigroup got $1.8 trillion. Goldman Sachs got $600 billion.
Not only that, the Fed threw money at some of the biggest corporations in the land, including Caterpillar, General Electric, McDonald’s and Verizon.
These were loans with no interest, or almost no interest, at a time when American consumers and small businesses couldn’t find loans to save their lives.
Sen. Sanders wrote the law that required the Fed, against its wishes, to disclose who got all this money.
Sanders said the revelations are “astounding,” and he’s right.
He said, “The Fed failed to require loan recipients to invest in rebuilding our economy and protect the needs of ordinary Americans,” and he’s right again.
Even though the U.S. banks that got the easy loans held most of the country’s mortgages and credit cards, the Fed never insisted that they reduce the principal on their mortgages or the interest rates on the credit cards.
“How many Americans could have remained in their homes,” asked Sanders, “if the Fed required these bailed-out banks to reduce mortgage payments as a condition of receiving these secret loans?”
Sanders smells a rate. “I suspect a large portion of these near-zero interest loans were used [by the banks] to buy Treasury securities at a higher interest rate,” he said, thus “providing free money to some of the largest financial institutions in this country on the backs of American taxpayers.”
The financial bailout was a giant boondoggle, undemocratic and kleptocratic to its core.
Leave it to Bernie Sanders, the independent socialist in the Senate, to call it like it is. Most of the other Senators are in the pocket of the banks.
If you liked this story by Matthew Rothschild, the editor of The Progressive magazine, check out his story "Keeping Perspective on North Korea."
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