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The U.S. Federal Reserve has been too busy bailing out foreign banks and dictators to help Americans during the financial implosion and Great Recession. The Fed has become the "global lender of last resort" all backed by the U.S. taxpayers. Not only is the U.S. the world's policeman, but we're also the world's banker too.

Who were the lucky banks who stuck us with the bill? "In addition to some of the biggest Wall Street firms and hundreds of smaller U.S. banks, the Fed’s emergency lending supported the U.S. branches of foreign banks, including one partly owned by the Libyan government."

Not only did Libya's Moammar Gaddafi's bank get bailed out, but also communist China was a big borrower and six European banks were among the top companies taking advantage of the backstop provided by the Fed and backed by U.S. taxpayers. In fact, foreign banks used the Fed's secret lifeline the most, Bloomberg reports.

The biggest borrowers from the 97-year-old discount window as the program reached its crisis-era peak were foreign banks, accounting for at least 70 percent of the $110.7 billion borrowed during the week in October 2008 when use of the program surged to a record. The disclosures may stoke a reexamination of the risks posed to U.S. taxpayers by the central bank’s role in global financial markets.

You think?

"The release of more than 25,000 pages of documents also revealed that many US banks had borrowed surprisingly little from the discount window", writes The Telegraph.

"Foreign banks took advantage of Fed lending programs even as their host countries moved to prop them up or orchestrate takeovers." Sure, why not? The Americans are always glad to pick up the bill. Just put it on our tab, while our ruling class decides to cut our Social Security so the "sacrifice" can be "shared". After all, who will help wealthy Americans evade taxes if foreign banks fail?

Six European banks were among the top 11 companies that sold the most debt overall -- a combined $274.1 billion -- to the Commercial Paper Funding Facility…

Bank of Scotland Plc, which had $11 billion outstanding from the discount window on Oct. 29, 2008, was a unit of Edinburgh-based HBOS Plc, which announced its takeover by London-based Lloyds TSB Group Plc in September 2008.

The New York Times reports that "the biggest borrower from the Fed program was Dexia, a French-Belgian bank that frequently held more than $30 billion in outstanding loans from the program from late 2008 to early 2009". In fact, "Dexia was one of the most frequent and prolific borrowers".

Dexia borrowed at least $31.5 billion from the Fed, while combined the governments of France, Belgium, and Luxembourg only ponied up $9.2 billion to help bail out the company that "made the nearly fatal mistake of buying an American company that insured bonds — including subprime mortgage bonds". Such a mistake should have been fatal, but thanks to the Fed, the U.S. taxpayer covered Dexia's bet.

Bloomberg adds:

Other foreign discount-window borrowers on Oct. 29, 2008, included Societe Generale SA, France’s second-biggest bank; and Norinchukin Bank, which finances and provides services to Japanese agricultural, fishing and forestry cooperatives. Paris- based Societe Generale borrowed $5 billion that day, and Tokyo- based Norinchukin borrowed $6 billion.

And then there's China — the nation where most of America's manufacturing was shipped in exchange for higher corporate profits. Bloomberg reports:

Bank of China, the country’s oldest bank, was the second- largest borrower from the Fed’s discount window during a nine- day period in August 2007 as subprime-mortgage defaults first roiled broader markets. The Chinese bank’s New York branch borrowed $198 million on Aug. 17 of that month, while two Deutsche Bank AG divisions borrowed $1 billion each, according to a document released yesterday.

The New York Times writs "a billion Here, a thousand there" from the Feds "saved Wall Street in the fall of 2008". I'm just so glad we saved those Galtian giants, those masters of the universe from financial ruin. Look at all the good they've done for the U.S. since 2008. The foreclosure crisis averted and we're damn near full employment with the first increase in take-home pay in nearly 30 years! Amazing job Wall Street! Oh wait. While Wall Street compensation, bonuses, and CEO bonuses bounced back with "the biggest gain in at least three years", the other America is still stuck in the longest, deepest recession since the Great Depression. Out here, we're losing our homes and struggling to find work.

The Fed sends billions of dollars to foreign banks, while ignoring their mandate to help the nation secure "maximum employment" and "stable prices" like, for example, home prices. But, surely the American sacrifice has been worth it. Thanks to the Fed, we've saved the foreign banks and bailed out the Chinese and the Libyan dictator. We just need to think of it as the 21st century Marshall Plan for the global rich, communist 'capitalists', and dictators with oil. We'll eat cat food, they'll eat caviar.

Originally posted to Magnifico on Fri Apr 01, 2011 at 02:59 AM PDT.

Also republished by The Amateur Left and Community Spotlight.

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Comment Preferences

    •  Why Does The Feds have this Power? (4+ / 0-)
      Recommended by:
      Cliss, angel d, vets74, Larsstephens

      Why does the US government allow the Federal Reserve to make any kind of loans - let alone large, secretive, high-risk, discount loans to foreign owned banks? Is this part of their charter? I thought they were specifically created to be America's bank, not the world's bank.

      Any decision to loan money to a foreign entity should be in the form of Congressional Bill, not something that the Federal Reserve is allowed to do at their own discretion. There is very little that people from the entire spectrum of the political range can agree on - but this is one of them.

      •  The Fed is sovereign. (3+ / 0-)
        Recommended by:
        Larsstephens, dfe, MJ via Chicago

        We live here.

        There's a difference.

        BTW: consider just where this anti-Fed guy stands. Conservative populists are far closer to progressives than they are to the Establishment Sell-Outs on either side of the aisle.

        Forget about the odd social issues for a moment.

        The big ticket items are income and wealth redistribution, wars, The Fed, jobs-jobs-jobs, getting health care for everybody, whether of not to prosecute the big financial crimes banksters, and getting that damn Citizens United scam reversed.

        Bill-In-Maine gets gay marriage, they get to keep NASCAR and drive like that on Saturday nights. Deal.

        Now let's get down to auditing The Fed.

        Financial capitalism's criminals + Angry White Males + KKK wannabes + Personality Disorder delusionals + George Will =EQ= The GOPer Base

        by vets74 on Fri Apr 01, 2011 at 01:42:44 PM PDT

        [ Parent ]

    •  HOLY SHIT! (3+ / 0-)
      Recommended by:
      angel d, vets74, Larsstephens

      does this in any way explain why we cannot use or wouldn't use Gaddaffi's funds to pay for the people's war?

  •  Plus almost all student & car loans and mortgages (7+ / 0-)

    The Fed was basically THE bank for the entire economy -- lending to fund many corporate payrolls, and according to the NY Times, almost every car loan, every student loan and every mortgage since 2008.

    When the Fed takes over lending for the entire economy, obviously it's going to take over lending for the entire economy.

    And although it put the "taxpayer's dime" at risk, it ended up making a massive amount of profit doing so.

    I'd say that wasn't a bad deal -- saving what was left of the economy at a massive profit for the taxpayer.

    Sort of like socialism.

    •  Actually, it was at a massive loss to the taxpayer (12+ / 0-)

      The loss on the cash poured into the AIG bailout of credit default swaps alone dwarfs all reported "profits" to the Treasury

      Read pp. 1-7 of Krugman's _The Great Unraveling_ (available from Google Books). NOW.

      by neroden on Fri Apr 01, 2011 at 05:07:50 AM PDT

      [ Parent ]

    •  Are you sure this turned a profit? (3+ / 0-)
      Recommended by:
      emal, walkshills, phonegery

      To say that, one would have to look at the entire balance sheet not just the investments that turned out good.

      What about my Daughter's future?

      by koNko on Fri Apr 01, 2011 at 06:14:25 AM PDT

      [ Parent ]

      •  Overall it is a loss due to Fanny/Freddie (3+ / 0-)
        Recommended by:
        HamdenRice, Cliss, koNko

        The Wall St banking bailout is projected to make money
        The AIG bailout is projected to break even
        The post bankruptcy auto bailout is projected to break even
        The pre bankruptcy auto bailout lose money
        HAMP program will lose money (just less than first budgeted)
        Fannie Freddie will lose the most amount of money.

        So you see, the part that is losing the most money is Fannie/Freddie. In other words, money used to help regular folks buy their homes. The Wall St. Banks are not costing us taxpayers anything. It's the regular folks losing their homes to foreclosure who are costing the taxpayers, through Fannie/Freddie and HAMP.

        •  Thanks for the summary. I would point out (3+ / 0-)
          Recommended by:
          icemilkcoffee, Larsstephens, koNko

          that the diary is about the Fed and a number of people here seem to be conflating the various different bailouts in order to demonize the Fed's program.

          •  The Fed inflicted two Big Bubble crime sprees (4+ / 0-)
            Recommended by:
            Cliss, Latins for Peace, koNko, Annalize5

            on the American economy.

            -- Big Bubble I (1994 - 2000)

            -- Big Bubble II (2003 - 2008)

            Along with the Reagan and Bush tax giveaways, these crime sprees stole 30% of America's wealth away from the Middle Class.

            The Bubbles did more than the tax breaks.

            Zero Interest Rate Policy
            (ZIRP) was espoused to cover over giving zero-interest-against-inflation money to the bankster insiders and their co-conspirators. Financial Capitalism was given unearned means to buy out even the largest of the firms in Productive Capitalism.

            The citizenry be damned.

            Now, fuck the Fed. Those bastards did us more damage than the commies ever imagined.

            Play the Ron Paul speech above. He's a socially conservative populist -- which is about two doors over from where you'll find Meteor Blades and bobswern.

            The Fed is a class enemy for anybody outside the top 2%.

            Financial capitalism's criminals + Angry White Males + KKK wannabes + Personality Disorder delusionals + George Will =EQ= The GOPer Base

            by vets74 on Fri Apr 01, 2011 at 01:58:19 PM PDT

            [ Parent ]

        •  You're mistaken (2+ / 0-)
          Recommended by:
          vets74, Larsstephens

          Fannie/Freddie were used as a massive bad bet sinkhole. The money they have lost was not used to help regular folks buy their homes. Instead, it was used to pay off financial bets and counterbets, all to the great benefit of Wall Street and the moneyed class.

          Republicans: Infinite compassion for the rich. Infinite contempt for the poor.

          by edg on Fri Apr 01, 2011 at 12:39:06 PM PDT

          [ Parent ]

          •  Fannie/ Freddie securities are not (1+ / 0-)
            Recommended by:

            the same as Wall St derivatives. These are conservative securities bought by institutionalized investors like pension funds and the like. This is not like the bailout of AIG, for example, where the government is bailing out financial bets gone bad.

            You are correct. It doesn't go directly to consumers. However, it does shore up the GSE's continued existence, which is good for current homebuyers. Right now over 90% of home loans are bought by GSE's. So the Fannie/Freddie bailout is certainly a good thing for consumers.

        •  This Reflects a Fundamental Misunderstanding (1+ / 0-)
          Recommended by:

          Of precisely who FNMA (Fannie Mae) and Freddie Mac (Federal Home Loan Mortgage Corporation) work with, and who they benefit.  

          For at least a decade, it has not been homeowners.

          Fannie and Freddie, as they are called, do not make loans.  At least, not to regular people.  They therefore do not "help regular folks buy their homes."  Anyone who told you differently has been reading too much right wing propaganda, similar to that which pretends Fannie and Freddie are to blame for the economic crisis because they somehow helped all those poor struggling minority first-time home buyers.

          These entities, one of them a GSE (government sponsored entity), the other a private entity that was also once a GSE but was taken private so that folks could make serious money, have as their primary mission ensuring the liquidity of the housing markets by providing capital for the secondary mortgage markets.  

          What is the secondary mortgage market?  It's the market that receives the mortgage on resale.  The market where mortgages get sliced, diced, bundled and resold as securities.  It's an investment market.  It benefits investors, who provide capital in exchange for guarantees that no other private "investment" provides (because the concept of "investment" normally implies even some minimal "risk" and there is NONE to the investors in Freddie Mac and Fannie Mae backed loans:)

          The guarantee that the GSE will make the investor completely whole if for any reason the homeowner cannot pay a mortgage that is included in an investment that has been placed into the secondary market.  

          Did I mention that the "investors" in these markets are (a) banks and (b) institutional investors including Wall Street hedge funds? (So much for "the Wall Street Banks aren't costing us anything.)

          So, you're wrong about the role of Freddie Mac and Fannie Mae and thus, wrong about who is in fact costing the taxpayers money.  What is costing us money is guaranteeing to so-called investors -- financial institutions, primarily -- that they need suffer not a cent of loss for having "invested."  

          Now reasonable people can agree that while the practice of securitization may have been quite helpful to the country when Freddie Mac and Fannie Mae were government sponsored entities, because it really did generate capital that once benefitted the most modest of homebuyers (consistent with their original missions), this same practice led to the destruction of the country's economy when in particular Freddie Mac went whole-hog free market in its approach to that mission, much the way that lenders did starting in the mid-1990's and pretty much abandoned their oversight and underwriting functions to the point where you could get a Freddie Mac or FNMA guarantee on a loan to a dead person.

          Meanwhile, at the "regular folks who are losing their homes level" level? They are not costing taxpayers a damned dime.  The minute that they truly lose the home, Freddie Mae and FNMA pay the lender, not them.  None of the financial and lending institutions (that's BANKS) that have benefitted handsomely from the guarantees they get from FNMA and Freddie Mac (we won't even speak about the additional insurance they also benefit from) is playing ball with "regular folks" that just need a little help.  That's why HAMP's a failure, as is every other program that was supposed to stabilize the home markets by seriously reducing the level of foreclosure activity.  It is asking favors from folks who have contributed absolutely nothing to our country's recovery, yet have themselves benefitted handsomely.

          I cannot believe how many people continue to want to blame the lowest, least powerful, actor in the equation just to defend TARP (which I know would not be happening if Dubbya was still President.)

          If you don't stand for something, you will go for anything. Visit Maat's Feather

          by shanikka on Fri Apr 01, 2011 at 01:15:36 PM PDT

          [ Parent ]

          •  Your explanation of what Fannie and Freddie is (1+ / 0-)
            Recommended by:

            does nothing to dispute my point that Fannie and Freddie's business is to buy up consumer home loans, and that the whole reason for their existence is to promote widespred home ownership. And they have succeeded very well in this regard. Perhaps too well.

            You should also mention that even now, the GSE's buy up well over 90% of the home mortgage loans. Thus they are most definitely helping home buyers today.

            Yes- they did indulge in sub prime after 2006. But they were a late comer to that market. The real problem that caused the recession was the derivatives. Fannie and Freddie were not major players in these as far as I know. People who bought Fannie/Freddie securities were the same conservative institutions that buy treasury bonds. These are conservative bonds. Not wild 'innovative' casino style bets.

            •  Yes it Does (1+ / 0-)
              Recommended by:

              Because regardless of the original reasons for both, in the past decade and a half they have been fundamentally focused on maximizing profit.  

              And they have also been held hostage in the past 3 years, same as the rest of the economy.  They buy up 90% of home mortgage loans because the "Wall Street banks" said, point blank, in a moment of extortion few people talk about -- there will not be another piece of mortgage paper written unless you increase the guaranty limit substantially so that you can take every loan, not just the ones that benefit the "regular folks" you are worried about.

              And just to prove that they meant it, for a period of time in 2007 the mortgage market for all but the elite levels simply STOPPED for nearly a month.

              I wrote my comment because you contended that "Wall Street banks" weren't costing the US taxpayer money.  The hell they aren't, for the reasons I just explained.  

              BTW I'm not sure where you get the "indulged in sub-prime after 2006."  You can find the shift in underwriting criteria for both FNMA and Freddie Mac all the way back to the mid-1990's since, of course, when predatory lending was first recognized by groups like ACORN and combatted, all those mortgages had been securitized and guaranteed by FNMA and Freddie Mac since they were all under the guaranty limits, being "modest homes" and all..

              If you don't stand for something, you will go for anything. Visit Maat's Feather

              by shanikka on Fri Apr 01, 2011 at 01:32:33 PM PDT

              [ Parent ]

              •  A funny way of seeing things (1+ / 0-)
                Recommended by:

                The loosening of lending criteria goes along with the 'perpetual housing boom' mindset of the time. You are right. Fannie and Freddie were not immune to that. Everyone bought into this mindset that home values would go up forever.

                But loosening of the lending standards helped poor people buy homes. You can't just go into a conspiratorial mindset that 'Wall St" has stolen from poor people, when everyone (including poor people) bought into the mindset of the perpetual housing boom.

                You mention the secondary market credit freeze but you didn't mention that all the way up to 2006, there was fierce competition in the secondary market competing with Fannie/ Freddie. Now of course that secondary market is dried up because everyone is deathly afraid of holding residential mortgage papers. You talk about all this as if it is a Wall St conspiracy, when in fact Wall St (and other institutional investors like pension funds) is just afraid to hold these mortgage securities without government backing.  Fannie/Freddie is single-handedly supporting the whole housing market right now. If the government just let Fannie Freddie go under like you are suggesting, then the whole housing market would have collapsed. How would that benefit regular folks?

                •  NO (1+ / 0-)
                  Recommended by:
                  MJ via Chicago

                  "Everyone" DIDN'T buy into this mindset.  It's a nice myth.  But it's false.  People in the trenches were screaming bloody murder for 15 years about what was happening to innocent homeowners as a result - and nobody listened either in our financial markets (aka "Wall Street") or, frankly, our own government.

                  Not until the whole house of cards came down.  Which is what gave birth to the blame-the-victims lie you keep repeating about who is ultimately costing us as taxpayers.

                  Now everyone wants to pretend differently.  I didn't use the word "conspiracy" to describe Wall Street's behavior.  Unbridled, heartless, take no prisoners commitment to maximizing profit explains it just fine.

                  If you don't stand for something, you will go for anything. Visit Maat's Feather

                  by shanikka on Fri Apr 01, 2011 at 06:57:28 PM PDT

                  [ Parent ]

  •  US banks were falsifying their accounting (8+ / 0-)

    so they didn't need to borrow much.  After all, the borrowings are to make up for mismatches between assets and liabilities, and if your accounting is fraudulent and you get to list accounting entries as if they are money (which banks do get to do thanks to... being banks), you don't have to worry about that.

    Read pp. 1-7 of Krugman's _The Great Unraveling_ (available from Google Books). NOW.

    by neroden on Fri Apr 01, 2011 at 05:06:46 AM PDT

  •  Interesting points to consider (7+ / 0-)

    (1) In the case of foreign branches of US Banks and US branches of Foreign banks, these entities are usually (a) local entities with foreign (in either direction) or joint venture ownership (b) subject to the laws and obligations of the host countries, and as it applies, to mother country. In other words, that foriegn band may be a local bank as well. Depends on the scope of business they are licensed for and engage in.

    (2) Quite a few foreign banks had exposure to and took substantial losses on debt in the US Mortage Crisis the percipitated the ultimate liquidity crissis. In other words, they lent money to US citizens who defaulted and ultimately had to write-down these losses.

    (3) During the crisis, not only the US Treasury pumped money into the system but foreign Treasuries and Central Banks as well, amounting to huge sums; this was done to maintain liquidity, support failing banks (rant away, I with you there) and defendcurrencies from collapsing or hyper inflating. Countries contributing significant funds included China, France, Germany, Japan, the UK and the US. As distastful as this is, had it not been done we wouldn't be having this discussion.

    (4) Where does the US Fed get it's funding? From bonds purchased by American and foreign investors including, substantially, foreign sovern funds, which is, in effect, the money of Foreign taxpayers funding the US government so it can operate doing stuff like bringing democracy to Iraq, whatever. During the crisis these funds also pumped funds into the Fed - I clearly remember Mr. Geithner's trip to Beijing when he demanded and got some odd billions and change. Imagine that.

    So what you have, is not the US playing some sort of unique role, but a big international banking system that makes sausage from whatever meat they can get their hands on, and the actual lenders of last resort are taxpayers everywhere, not just the US.

    So if you are feeling victimized and angry, welcome to the club, we are all swimming in the same shit filled pool.

    Would you like to meet some really angry taxpayers? Visit Germany, home of the bottomless Euro pit.

    As for US Asians, what we noticed that kind of, um, pissed us off, was in the aftermath of this crisis, the draconian rules that applied to our banks following the Asian Banking Crisis of 10 years previous including forced insolvencies, high rate loans from the IMF and other assorted hardships suddenly went out the window when Western banks and economies created a much larger mess for essentially the same reasons, unregulated speculation and lack of acountability and transparancey.

    But I guess that's because some guys are too big to fail while other smaller guys get stomped into the mud.

    Life is not fair. Really it is not. Not at all.

    What about my Daughter's future?

    by koNko on Fri Apr 01, 2011 at 06:11:20 AM PDT

  •  You keep saying US taxpayers (5+ / 0-)

    except the fed discount window isn't funded by tax payers and the fed overall is cash flow positive.

    •  and if its loans default (5+ / 0-)

      who picks up the tab?

      And may I remind you that

      the Federal Reserve had extended $9 trillion to various banks, foreign central banks, corporations, and hedge funds, often collateralized by junk.  That’s roughly $30,000 of lending for every American.

      If (one is tempted to say when) the music stops and those banks cannot repay those debts, who is on the hook?

  •  Global lender of last resort? (0+ / 0-)

    Don't make me laugh.

    As our past prime minister (Sweden) said: "When you're in debt you're not free."

    When you start printing money I think global lenders to the US get a little peeved. To not immediately start collecting the debt owed by the US, and thus make it go bankrupt, global lenders have to be in on the deal also.

    So I would stop whining about US taxpayers. You never gave Chinese taxpayers a thought while living high on their money.

    Dissolve Israel; stop distinguishing between jew and non-jew in Palestine.

    by high5 on Fri Apr 01, 2011 at 06:21:56 AM PDT

    •  i think in the real world - they have other names (2+ / 0-)
      Recommended by:
      high5, Cliss

      for this.

      Kickbacks, extortion, hush money

      fact does not require fiction for balance (proudly a DFH)

      by mollyd on Fri Apr 01, 2011 at 07:19:07 AM PDT

      [ Parent ]

    •  "global lenders to the US" (0+ / 0-)

      Another description would be, "countries that choose to save US dollars."  Generally these are countries that are keeping their own currencies weak, pursuing export market share at the expense of US workers.  If they decided to "cash in their bonds" and hold non-interest-bearing cash instead, that would be fine.  If they don't want to hold dollar-denominated assets at all, the only way they can do that is to reverse the current account flow -- stop exporting to us and start importing.  That sounds like a pretty good deal for US workers, too.

      I'm special. Everyone is.

      by lilnev on Fri Apr 01, 2011 at 07:57:00 AM PDT

      [ Parent ]

  •  Let them eat catfood n/t (1+ / 0-)
    Recommended by:
  •  it gets even more interesting (4+ / 0-)
    Recommended by:
    notdarkyet, emal, walkshills, Cliss

    when you consider the "collateral" that was supposed to underpin the lending:

    72% of the Fed’s loans on September 29 from the Primary Dealer Credit Facility were junk or equivalent (defaulted and unrated securities or equity)
  •  The money was paid back in full (4+ / 0-)

    wasn't it? And we did make a profit right?

    I don't like lending money to Goldman Sachs and Libya either but if all these loans were paid back, no hurt no foul.

    You should probably mention the whole story to give a more nuanced view. That's why I selectively use info I read on DK, and go to more traditional sources for economics or science.

    "Don't fall or we both go." Derek Hersey 1957-1993

    by ban nock on Fri Apr 01, 2011 at 07:55:10 AM PDT

  •  Kudos to Bloomberg for getting the records. (2+ / 0-)
    Recommended by:
    emal, phonegery

    I am the fellow citizen of every being that thinks; my country is Truth. ~Alphonse de Lamartine, "Marseillaise of Peace," 1841

    by notdarkyet on Fri Apr 01, 2011 at 08:13:44 AM PDT

  •  "surprisingly little" (1+ / 0-)
    Recommended by:
    angel d

    Yeah but who cares if US bankstah lied to congress and said they only went there once at the request of Fed when they actually went there several times...but I digress... lying under oath to congress is only punishable when you're a steroid abuser or some other such little person. Yeah and who cares if one of the bankstahs (Jamie Dimon )also happens to be on the board at the NYFed at the same time that his bank borrowed the "surprisingly little" sum of $313 billion dollars in one month alone(gee wasn't the economic stimulus for us mere serfs about 2x as much as this one bank borrowed in one month)..apparently conflict of interest is also for sissies.

    And yeah color me a naive, but Gov't Sacks borrowed the "surprisingly little" sum of $50 billion one of the times they did it. Gee that seems like a lot when it comes to how much in domestic spending cuts are we talking about in congress these days...yeah around that same number....yeah it's all relative and in context..but jeebus...must be nice to own a money printing press, hire some accountants to sanction bogus market to make believe asset values, and that make believe asset garbage value as collateral for the loan. (pssst, ben I've got whole lot of collateral sitting out in 4 green trash bags in front of my house right now as it's trash pick up day)

    Listen if there is really nothing to hide then why is the Fed refusing to be upfront about it all and why did they give them some really crappy files that are extremely time consuming to sort and read...yeah....there's nothing to see...move along...must look forward and not backward.

    "When will the American teachers follow the lead of Wall Street and start making some sacrifices for the children"..Jon Stewart

    by emal on Fri Apr 01, 2011 at 08:13:44 AM PDT

  •  Taxpayers have nothing to do with this (3+ / 0-)
    Recommended by:
    shrike, ThinkFirst, lordcopper

    The US Federal Reserve System is, in fact, a US government agency, but its activities are completely self-financed through its operating profits as a bank to bankers. In fact, it makes a profit and hands that profit right over to the US Treasury, effectively canceling US government obligations to others or itself and allowing for more such obligations to be incurred (more spending or more tax cuts).  

    The Fed creates the money it spends, which means that taxpayers aren't on the hook for anything the Fed does with it, even if they screw up big-time with it and faces solvency concerns (don't worry, the Fed will just create more money to deal with it).

    Taxpayers are at best an indirect stakeholder in the whole Federal Reserve business.

    •  Incorrect: (0+ / 0-)
      Taxpayers have nothing to do with this

      What about the bank bailout from November 2008 the $750 billion Hank Paulsen got from the government. That was 100% taxpayer-paid funds.
      The US Federal Reserve System is, in fact, a US government agency

      The Fed is not a US government agency.  They are a privately-owned consortium of banks, like a co-op.

      As far as I know the Fed does not provide profits to the treasury.  

      •  Afraid you're mistaken (1+ / 0-)
        Recommended by:

        across the board on that one.  

        None of the bailout went to the Fed.  That all went to the US Treasury. Hank Paulsen had nothing to do with the Fed, which is an independent agency, like the CIA, not part of Treasury.

        The Fed is certainly a US government agency, whose employees are federal employees with federal benefits and whose directors are appointed by the Federal government.  

        It is not privately owned.  Member banks buy shares like you buy a membership in your local Lifetime Fitness.  Shares entitle a bank to be regulated by the Fed and to enjoy access to its lending provisions but provide no governance input whatsoever.

        And the Fed provides actually quite handsome profits every year to the US Treasury, by law, which you can review by looking at their annual reports and audits (yes, they are even audited).

  •  Rescued! (4+ / 0-)

    I've become aware that Rescued tags as well as recommended tags are being removed and I just want to have this as the record, so I can pin this down!

    Great diary Magnifico!

    In our sleep, pain which cannot forget falls drop by drop upon the heart until, in our own despair, comes wisdom through the awful grace of God ~RFK

    by vcmvo2 on Fri Apr 01, 2011 at 08:27:11 AM PDT

  •  This Diary is Complete Nonsense (5+ / 0-)

    Dkos has reached a new low in demagoguery and populist propaganda with this claptrap.

    The Fed is the world's banker because the U.S. dollar is the reserve currency of the world's economy.  Only the Fed can supply dollars to the world financial system to sustain it in times of crisis.

    All the loans that the Fed made to banks were paid back with interest so U.S. taxpayers have not lost anything and won't lose anything in the future either.  Bernanke acted aggressively because he knew better than anyone that the Great Depression was caused by the failure of the Fed to supply liquidity after the 1929 crash.

    As a result, the Great Recession did not turn into a decade long depression rectified only by the worst disaster in history:  WWII.

    •  Yup. It should be seen as good news that the US (0+ / 0-)

      dollar continue to be the currency of choice with the foreigners.

      Likewsie, it's hard to imagine that people get angry because the chinese are borrowing money from us and paying us interest. Gosh- that is so horrible, right?

  •  Awesome ... US is world's debt hole! (2+ / 0-)
    Recommended by:
    boatsie, Cliss

    As if bleeding for the world and shopping for the world weren't enough.  If this is what the neocons mean when they say that America is and must be the "indispensible nation", then I welcome decline and irrelevancy.

    Karl Marx wishes he was this guy

    by Visceral on Fri Apr 01, 2011 at 09:42:38 AM PDT

  •  propping up the global economy? (1+ / 0-)
    Recommended by:

    as well as the international war machine? and we the middle and lower classes are acceptable losses?

    I keep thinking of the day soon after the election when Hilary Rodham Clinton's black limo snaked down towards the Obama transition headquarters .... so soon after the election and I get the feeling that she was the water carrier for the whole stinking mess.

    Here's how it is, mr . president elect. You wanted it so bad. Well, you have the title .. but here's who really pulls the strings .. and the string pullers? well, they made Obama & Cos political prowess pale and shudder.

    Slightyly o/t here but the parallels between the 'uprising' of the dormant frustrated American through use of expert social networking campaign so that we all felt we had elected 'our man' ... it was our country again ... ? well, i may have said it elsewhere but i feel this was a trial run for the MENA uprisings.  God only knows what funds were allocated through DOD and State to pollinate .... follow tech@state....

  •  Re: dough. (0+ / 0-)

    Recall back in August -September of 2008 when the whole house of cards was swaying back and forth.

    Giant companies folded, one by one.  The then-Sec. of the treasury Henry Paulsen went to the government, with a single piece of paper which said "need $750 billion for unspecified losses" or something to that effect.

    I always thought it was US companies gone bad, in particular Freddy Mac and Fannie Mae.  And other US banks.  Apparently not.  I found out later, there were international companies which had their hand out!!!
    Gimme my money.  I believe a German bank the biggest payout, also UBS Swiss bank?  

    Either way, it was obvious from the congressional hearings.  These people were sweating big time.  Someone was pressuring them, and I suspect it was a foreign bank.  I'd love to know which one it was, because they are the black beating heart of corruption.

    Brought to you by Globalism.

  •  to be fair (0+ / 0-)

    the Fed also bailed out the commercial real estate industry in the US as well.

    All those hotels, malls, strip malls, etc that we didn't need but got built anyway, the people who built them are being bailed out by the taxpayers.

    How many people know that the Fed has a bunch of Hilton Hotels on its balance sheet?  

    Save Paris Hilton!  

    "I'll hold my nose and vote but I won't hold my nose and canvass or call or donate." Some Dkos Comment

    by onemadson on Fri Apr 01, 2011 at 01:54:13 PM PDT

  •  Has the diarist given any consideration to what (0+ / 0-)

    would happen to jobs in the U.S. if the whole wold had fallen into depression.

    "Because I am a river to my people."

    by lordcopper on Fri Apr 01, 2011 at 03:01:34 PM PDT

  •  Once in a while a diary goes up... (0+ / 0-)

    that literally leaves me breathless.

    This is one of those diaries. :(

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