Release: Fed Disclosure Lifts Veil of Secrecy, Sanders Says

[Sandra]

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Release: Fed Disclosure Lifts Veil of Secrecy,
Sanders Says

December 1, 2010

WASHINGTON, Dec. 1 - Calling the revelations "jaw dropping,"
Sen. Bernie Sanders (I-Vt.) said today's disclosure by the Federal
Reserve that it gave banks and other institutions an estimated $3.3
trillion in emergency loans and other assistance during the financial
crisis "begins to lift the veil of secrecy at the
Fed."

The estimated $3.3 trillion in liquidity and more than $9 trillion in
short-term loans and other financial arrangements dwarf the $700 billion
Treasury Department bank bailout out signed into law under President
George W. Bush.

The disclosure, available on the Fed Web site, was strenuously opposed by
Chairman Ben Bernanke during a 2009 Senate Budget Committee hearing. The
requirement to reveal the information was mandated by a Sanders amendment
to the Wall Street reform law. The same amendment ordered the Government
Accountability Office to conduct a top-to-bottom audit of the
Fed.

"Almost two years ago I asked Chairman Bernanke to tell the American
people which financial institutions and corporations received trillions
of dollars as part of the Wall Street bailout. He refused. Today, as a
result of an audit-the-Fed provision I put into the financial reform
bill, we finally learn the truth - and it is astounding," Sanders
said. (Read his full statement here.)

"We now know that Fed loaned trillions of dollars at zero or
near-zero interest rates not only to the largest financial institutions
in this country, but also to many of our largest corporations - including
GE, McDonalds and Verizon. Most surprising, the Fed also lent huge sums
of money to foreign private banks and corporations" he
added.

Among the corporate beneficiaries were Citigroup, which received over
$1.8 trillion; Morgan Stanley, which received nearly $2 trillion; Goldman
Sachs, which received nearly $600 billion; and Bear Stearns, which
received more than $960 billion in short-term loans with an interest rate
as low as 0.5 percent.

The Fed's multi-trillion bailout was not limited to Wall Street and big
banks, Some of the largest corporations in this country also received a
multi-trillion bailout. Among those are General Electric, to which the
Fed made over $16 trillion in financing under a commercial paper funding
facility alone; McDonald's; Verizon; and Toyota.

While the Fed loans were intended to stabilize the financial system and
the entire economy, Sanders said today's disclosure underscores that
"the Fed failed to require loan recipients to invest in rebuilding
our economy and protect the needs of ordinary Americans."

For example, at a time when big banks have nearly $1 trillion in excess
reserves parked at the Fed, the Fed did not require those institutions to
increase lending to small and medium-size businesses as a condition of
the bailout? At a time when large corporations are more profitable than
ever, why didn't the Fed demand that corporations that received backdoor
bailouts create jobs and expand the economy once they returned to
profitability? At a time when the Fed lent money to investors holding
credit card debt, it did not require any interest rate caps for
consumers, leading many of them to pay credit card interest rates of 28
percent or higher.

Sanders said the disclosure also raises questions about the degree to
which secret Fed loans turned out to be direct corporate welfare to big
banks. He called for an investigation to determine whether banks took
loans at near-zero interest and then loaned that same money money back to
the federal government at a considerable higher interest rate.
"Instead of using this money to reinvest in the productive economy,
I suspect a large portion of these near-zero interest loans were used to
buy Treasury securities at a higher interest rate providing free money to
some of the largest financial institutions in this country on the backs
of American taxpayers," Sanders said.

The disclosure of the Fed's loan portfolio, Sanders said, raised another
troubling issue: "How many big banks repaid Treasury Department
bailouts in order to avoid limits on executive compensation received
no-strings attached loans from the Federal Reserve?" Overall,
Sanders noted, Wall Street executives are making more money today than
before the financial crisis.

The four largest banks in this country - Bank of America, JP Morgan
Chase, Wells Fargo, and Citigroup - issue half of all mortgages in this
country. Today's disclosure reveals that these banks received hundreds of
billions from the Fed. "How many Americans could have remained in
their homes, if the Fed required these bailed-out banks to reduce
mortgage payments as a condition of receiving these secret loans?"
Sanders asked.

Link


Video 1

http://www.youtube.com/watch?v=_Ys4GbR5p2c&feature=player_embedded


Video 2

http://www.youtube.com/watch?v=lcLWDGb0RqA&feature=player_embedded


Video 3

http://www.youtube.com/watch?v=F2B2lz5q7jw&feature=player_embedded