The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged,you're-on-your-own individualism for everyone else."
Trillions to banks, but the morons in our government are fighting over millions for working people struggling to make ends meet and unemployed people who can't find the ends to meet.
Lately I've been trying to wish away my debt, but nope.
From Matt Taibbi's blog...
1) Bank of America is shifting a huge collection of Merrill Lynch derivatives contracts onto its own federally-insured balance sheet. This move of risky instruments off the uninsured Merrill balance sheet onto the commercial bank's balance sheet was done to prevent Bank of America's creditors from attacking the firm with collateral calls and other sorties. Essentially, an irresponsible debtor, B of A, is keeping a loan shark from breaking his legs by getting his rich parents to co-sign his loan. The parents in this metaphor would be the FDIC.
The FDIC naturally is not pleased with this development, but the Fed, the supreme banking regulator, is apparently encouraging this move. Here's how Bloomberg characterized this move:
In short, the Fed's priorities seem to lie with protecting the bank-holding company from losses at Merrill, even if that means greater risks for the FDIC's insurance fund.
Again and again, the Fed proves it has no appetite for allowing Wall Street to eat its own pain, and continually encourages banks to stick the government with its losses and bad assets. This move will allow Bank of America to keep a Band-Aid over its disastrous financial situation far longer than it would be able to in a genuinely free market. People should be outraged at this development.
2) Barack Obama is apparently expressing willingness to junk big chunks of Sarbanes-Oxley in exchange for support for his jobs program. Business leaders are balking at creating new jobs unless Obama makes compliance with S-O voluntary for all firms valued at under $1 billion.
Here's how to translate this move: companies are saying they can't attract investment unless they can hide their financials from investors. So the CEOs and gazillionaires on Obama's Jobs Council want the politically-vulnerable president to give them license to cook the books in exchange for support for his jobs program. From the Pittsburgh Post-Gazette:
"All you're going to do is have more fraud. The ultimate losers are going to be investors," said Jeff Klink, a former federal prosecutor whose Gateway Center firm helps clients prevent and detect fraud.
If the financial crisis proved anything, it's that Wall Street companies in particular have been serial offenders in the area of dishonest accounting and book-cooking. Sarbanes-Oxley is obviously no panacea, but removing it in exchange for a temporary, election-year job boost is exactly the kind of myopic, absurdly irresponsible shit that got us into this mess in the first place. For Obama to pull this in the middle of these protests is crazy.
If anyone thought OWS has already done its job, and Washington has gotten the message already, think again. They're not going to change until the protesters force them to change, it seems.