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Secret Fed Loans Gave Banks Undisclosed $13B

Secret Fed Loans Gave Banks Undisclosed $13B
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing. The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue. Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse. ‘Change Their Votes’ The Fed, headed by Chairman Ben S. Related:  Banking and finance issues

Chart Of The Day: Fed Interventions Since 2008 The chart below, via Stone McCarthy, shows the months with Fed intervention since December 2008. That in the past 42 or so months, less than one third have been intervention-free, should close any open questions about whether the stock "market" is anything but a policy vehicle used by the Fed to perpetuate a broke(n) status quo now entirely dependent on every market up (and down) tick. We dread to think what would happen to those record low US bond yields if the market were to be left on its own without the backstop of guaranteed Fed intervention in the interest rate market... ironically something which Barclays is in boiling hot water for right about now. And a detailed breakdown:

The $7 trillion secret loan program: The government and big banks should be punished for deceiving the public about their hush-hush bailout scheme Photograph by Jupiterimages/ Getty Images. Imagine you walked into a bank, applied for a personal line of credit, and filled out all the paperwork claiming to have no debts and an income of $200,000 per year. The bank, based on these representations, extended you the line of credit. Then, three years later, after fighting disclosure all the way, you were forced by a court to tell the truth: At the time you made the statements to the bank, you actually were unemployed, you had a $1 million mortgage on your house on which you had failed to make payments for six months, and you hadn’t paid even the minimum on your credit-card bills for three months. Yet this is exactly what the major American banks have done to the public. The banks’ claims of financial stability and solvency appear at a minimum to have been misleading—and may have been worse. So where are the inquiries into the false statements made by the bank CEOs? So what to do?

Exposing the Fed: What is the Federal Reserve? Part 3 Editor Note: For those of you who are not familiar with Marilyn MacGruder Barnewall, she is the woman who wrote the definitive book on Ambassador Lee Wanta, Wanta! Black Swan, White Hat. I listened to several interviews with Marilyn that were conducted by Teri Ambach and the team at Global News and Views on Facebook. (Marilyn MacGruder Barnewall, Global Financial Affairs Editor) Unfortunately, the same cannot be said about the Federal Reserve System. It is a privately held corporation owned by bankers… most of whose names are seen on Wall Street (though international banks now own larger and larger shares of the Federal Reserve System, placing control of America’s economy in the hands of non-American foreigners). Before talking about what the Federal Reserve System does, one other important fact needs to be mentioned: The Federal Reserve is an unlawful organization. Article 1 Section 8 of the Constitution says the following: The loans were to cover up secret bank and corporate bailouts.

7.77 trillion in secret Federal Reserve loans to banks? I have been looking into the claim recently made by any number of internet sites (for example, here’s one of the many hundreds, if you insist on a link) that the Federal Reserve made $7.77 trillion in secret loans to banks. The claim is outrageously inaccurate, as I explain below. Let me begin with some accounting basics. Suppose that at the start of January I make a 3-month loan of $100 to person A and a 1-month loan of $100 to person B. At the start of February, person B rolls it over into a new 1-month loan, and does so again at the beginning of March. The correct answer, of course, is that I lent $100 to person A and I lent $100 to person B. This is a very elementary point in economics or accounting. On the other hand, if your goal is to come up with a number that sounds really big, you’ll be excited to learn that I also lent $100 to person C in the form of a series of daily loans. So where in particular did people come up with this $7.77 trillion figure?

Why This Harvard Economist Is Pulling All His Money From Bank Of America A classicial economist... and Harvard professor... preaching to the world that one's money is not safe in the US banking system due to Ben Bernanke's actions? And putting his withdrawal slip where his mouth is and pulling $1 million out of Bank America? Say it isn't so... From Terry Burnham, former Harvard economics professor, author of “Mean Genes” and “Mean Markets and Lizard Brains,” provocative poster on this page and long-time critic of the Federal Reserve, argues that the Fed’s efforts to strengthen America’s banks have perversely weakened them. Is your money safe at the bank? Last week I had over $1,000,000 in a checking account at Bank of America. Why am I getting in line to take my money out of Bank of America? Before I explain, let me disclose that I have been a stopped clock of criticism of the Federal Reserve for half a decade. Let me explain: Currently, I receive zero dollars in interest on my $1,000,000. They will not be able to return my money if: What is the solution?

Too Big to Stop: Why Big Banks Keep Getting Away With Breaking the Law - James Kwak - Business For the country's biggest financial institutions, it's still worth it to break the law, because the government has no way to make the banks pay for acting illegally Reuters Move along, nothing to see here. That's been the Wall Street line on the financial crisis and the calamitous behavior that caused it, and that strategy has been spectacularly successful. Occasionally, a news event brings the need for financial reform momentarily into the partial spotlight, like last week when Judge Jed Rakoff rejected a proposed settlement between the SEC and Citigroup over a complex security called a CDO (actually, a CDO-squared) that the bank manufactured and pushed onto investor clients solely so it could bet against it. The issue in the Goldman case was whether the bank properly disclosed that John Paulson, a hedge fund manager, was involved in the selection of securities for the deal, because he wanted to bet against them.

The Federal Reserve Explained in 7 Minutes Have you ever caught yourself wondering how nearly every country on earth can be in debt to outside sources? In my world, if I owe a friend $10 and he owes me $5 then I simply give him $5 and we call it “even.” But that’s not how the world of international banking works. If you have a minute, Wikipedia tries to keep an updated National Debt List. The reason that nearly every nation on earth has external debt is simple. Even in cases like China, where they own more of our debt than anyone, the Chinese still ultimately answer to the world banking elite. We hear a lot of talk about our National Debt and “debt ceilings” coming out of Washington D.C. but very few talk about the real issues. As long as privately held banks like The Federal Reserve rule the world, then people will always be debt slaves. Furthermore, until people truly start to understand the world banking system and get mad enough to force their will then nothing will change. Every American should watch this but very few will.

More on those secret Federal Reserve loans to banks The claim that the Federal Reserve extended trillions of dollars in secret loans to banks continues to be spread. Here at Econbrowser we will continue to try to correct some of the misunderstanding that is out there. Consider for example this item from the Levy Institute blog written by University of Missouri Professor L. Randall Wray, which begins: It literally took an act of Congress plus a Freedom of Information Act lawsuit by Bloomberg to get [Bernanke] to finally release much of the information surrounding the Fed’s actions. This is a common misunderstanding. Another key fact that seems to be underappreciated by those passing along these numbers is that the vast bulk of this $7.77 trillion figure was never lent at all. The $7.77 trillion also includes $1 trillion for the Fed’s purchases of mortgage-backed securities. The $7.77 trillion also includes $600 B for outright purchases of Fannie and Freddie debt (which turned out to be only $169 B), and another $300 B for Treasury debt.

IRS Agent Whistleblowers Shelley L. Davis - The first, and last, official IRS Historian. Source: Mr. Chairman and Members of the Senate Finance Committee, I am pleased to be able to share a few of my thoughts and experiences with you today as you explore specific issues of IRS abuse of those the tax agency likes to call its "customers" -- American taxpayers. For 16 years I worked as an historian for the federal government. My testimony today will touch briefly on three areas: 1. ) The cultural climate of the IRS; 2. ) List keeping at the IRS; 3. ) The IRS definition of "tax protester." My introduction to the culture of the IRS came during my earliest days with the tax agency, in the fall of 1988. This reluctance to think about the past translated into routine day-to-day operations, meaning that all documents were tossed, shredded, whatever, when a program was completed--or shut down as in the case of many IRS computer projects. Thank you.

"Fraud As a Business Model" There were many factors that contributed to our recent financial bubble: deregulation, cheap money from the Fed, failure to enforce remaining regulations, crony capitalism, hubris, speculation, leverage, and fraud among other problems. While fraud wasn't the only issue, it was and is a significant contributor to the credit bubble. Restraining fraud is a necessary but not sufficient condition for a sound financial system. Congressional investigations in recent years have put ample evidence of fraud in the public domain. To illustrate just one type of malicious mischief, Senator Carl Levin (D. Arianna Huffington pointed out that the financial system is rigged and that offenders get off lightly: Until the Securities and Exchange Commission sued Goldman Sachs for fraud in April of 2010, it was easy to forget that we have a regulatory agency designed to protect the public from the pillaging of corporate America. On Friday, September 2, 2011, The U.S.

Are Private Banks Unconstitutional? Ellen BrownRINF Alternative News The movement to break away from Wall Street and form publicly-owned banks continues to gain momentum. But enthusiasts are deterred by claims that a state-owned bank would violate constitutional prohibitions against “lending the credit of the state.” California’s constitution is typical. It states in Section 17: “The State shall not in any manner loan its credit, nor shall it subscribe to, or be interested in the stock of any company, association, or corporation . . . .” The language sounds prohibitive, but what does it mean? How can these blatant extensions of the state’s credit be reconciled with the constitutional prohibitions against the practice? North Dakota’s constitution has particularly strong language. Yet this prohibition has not prevented the state from establishing its own bank. In the nineteenth century, Mississippi, Arkansas, Florida, Kentucky, and Indiana all had their own state-owned banks. Was that constitutional? In Briscoe v.

Bogle: Boost taxes on Wall Street 'gamblers' John Bogle counted himself among the 1% of wealthiest Americans a couple decades ago. You might not guess that today, when you hear the 82-year-old founder of mutual fund company Vanguard rail against economic inequality. He can sound almost like an Occupy Wall Street protester: "Our markets have gone crazy, and there is 200 times as much speculation as there is investing," he says. It has been 15 years since the low-cost investing pioneer stepped down as CEO of Vanguard. Bogle remains wealthy, but his income is a fraction of what he earned when he ran Vanguard. He resists a label that applies to most people his age: "I'm so far from retired, it's almost an embarrassment. Bogle says he's paying close attention to tax policies he considers unfair, including one that's favorable to the mutual fund industry and investors with taxable accounts. Here are excerpts from a recent interview with Bogle: Q: What do you think about the ongoing discussion over tax fairness?

Who owns American Debt? House of Cards: Season 3(image by YouTube) I came across this chart from an article at Global Economic Intersection (where I am also a sometimes contributor): According to statistics from US Treasury Department, China cut US treasury holdings in 2014 by $25.8 billion. Despite all this, China remains US biggest foreign creditor.(image by Global Economic Intersection) A couple of things stand out:1. From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. So, the Fed is propping up purchases of Treasuries to disguise lack of interest from the usual world buyers. 3. The popular Netflix series, House of Cards perpetuated the myth of a finite money supply with this weekend's release of Season 3. Federal Outlays 2016(image by US Government Spending) Presently, the Social Security program is the largest single item in the annual federal government budget.

Goldman Wins New York Fed Auction for A.I.G. Assets ReutersRobert Benmosche, chief of American International Group. 8:43 p.m. | Updated Goldman Sachs is picking up some of the pieces from the wreckage of the American International Group. On Wednesday, the Federal Reserve Bank of New York announced that it had sold assets with a face value of $6.2 billion to Goldman, which trumped four other investment banks for the securities. The auction — the second such sale this year — signals the renewed interest in mortgage-related investments and other risky securities at the center of the financial crisis. “There’s a saying: there are no bad bonds, there are just bad prices,” said Evan Lorenz, an analyst at Grant’s Interest Rate Observer. In all, the government pumped more than $182 billion into A.I.G. to help stabilize the broader financial system. T.J. “I am pleased with the continued interest in these assets,” William C. Goldman and other investment banks have been beneficiaries of the government’s rescue of A.I.G.