Two Progressive Leaders whom I respect immensely, recently made reference to a very unusual event -- a One-time Only -- Audit of the Federal Reserve. Since they both focused on different aspects of this under-the-radar report, I thought I'd take a few moments, to help illustrate and amplify their points of interest.
First, their keen observations:
3) The Federal Reserve needs to provide small businesses in America with the same low-interest loans it gave to foreign banks. During the financial crisis, the Federal Reserve provided hundreds of billions of dollars to foreign banks and corporations including the Arab Banking Corporation, Toyota, Mitsubishi, the Korea Development Bank, and the state-owned Bank of Bavaria. At a time when small businesses can't get the lending they need, it is time for the Fed to create millions of American jobs by providing low-interest loans directly to small businesses.
Wall Street Protests -- Oct 08, 2011
by Senator Bernie Sanders
And this little factoid, about the U.S. Federal Reserve taking care of their clients:
The GAO says that our Government HAS HANDED OUT $16 TRILLION TO THE BANKS.
That little gem appears on Page 131 of GAO Report No. GAO-11-696. A report issued two months ago. A report that somehow seems to have eluded the attention of virtually every network, every major newspaper, and every news show.
Where's Your $50,000?
by Alan Grayson -- Oct 07, 2011
Thank you Senator Sanders. Thank you Representative Grayson.
How can we hold them to account, if we don't bring to light, these trivial Trillion Dollar findings? Now on to this one-time-only "accountability" report ...
GAO-11-696 -- July 21, 2011
Source: U.S. Government Accountability Office (GAO)
Federal Reserve System: Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance
Summary
The Dodd-Frank Wall Street Reform and Consumer Protection Act directed GAO to conduct a one-time audit of the emergency loan programs and other assistance authorized by the Board of Governors of the Federal Reserve System (Federal Reserve Board) during the recent financial crisis. This report examines the emergency actions taken by the Federal Reserve Board from December 1, 2007, through July 21, 2010. [...]
July 2011 -- GAO-11-696 (pdf 3 mb)
FEDERAL RESERVE SYSTEM
Opportunities Exist to Strengthen Policies and
Processes for Managing Emergency Assistance
What GAO Found
On numerous occasions in 2008 and 2009, the Federal Reserve Board invoked emergency authority under the Federal Reserve Act of 1913 to authorize new broad-based programs and financial assistance to individual institutions to stabilize financial markets. Loans outstanding for the emergency programs peaked at more than $1 trillion in late 2008. The Federal Reserve Board directed the Federal Reserve Bank of New York (FRBNY) to implement most of these emergency actions. In a few cases, the Federal Reserve Board authorized a Reserve Bank to lend to a limited liability corporation (LLC) to finance the purchase of assets from a single institution. In 2009 and 2010, FRBNY also executed large-scale purchases of agency mortgage-backed securities [MBS] to support the housing market. [...]
Well sometimes you got to dig a little deeper -- especially when the follow-up Report is a bit longer than 3 pages ... unlike the Bill that authorized these Bailout actions. Accountability, takes more than a wink and nod, despite how they do business on the Status Quo Street.
[pg 231]
Table 30: Top 25 Largest TAF Borrowers at the Parent Company Level
Parent company of TAF borrowing institution(s)
Total TAF loans
Percent of total
Dollars in Billions
1 Bank of America Corporation $280 7.3%
2 Barclays PLC (United Kingdom) 232 6.1%
3 Royal Bank of Scotland Group PLC (United Kingdom) 212 5.5%
4 Bank of Scotland PLC (United Kingdom) 181 4.7%
5 Wells Fargo & Co. 159 4.2%
6 Wachovia Corporation 142 3.7%
7 Societe Generale SA (France) 124 3.3%
8 Dresdner Bank AG (Germany) 123 3.2%
9 Citigroup Inc. 110 2.9%
10 Bayerische Landesbank (Germany) 108 2.8%
11 Dexia AG (Belgium) 105 2.8%
12 Norinchukin Bank (Japan) 105 2.8%
13 JP Morgan Chase & Co. 99 2.6%
14 UniCredit SpA (Italy) 97 2.5%
15 Mitsubishi UFJ Financial Group, Inc. (Japan) 84 2.2%
16 WestLB AG (Germany) 78 2.1%
17 Deutsche Bank AG (Germany) 77 2.0%
18 Regions Financial Corporation 72 1.9%
19 BNP Paribas SA (France) 64 1.7%
20 Sumitomo Mitsui Banking Corporation (Japan) 56 1.5%
21 UBS AG (Switzerland) 56 1.5%
22 HSH Nordbank AG (Germany) 53 1.4%
23 Mizhuo Financial Group, Inc. (Japan) 51 1.3%
24 Commerzbank AG 51 1.3%
25 Hypo Real Estate Holding AG (Germany) 47 1.2%
All others 1,051 27.5%
Total $3,818 100.0%
[That's nearly $4 Trillion in total for those TAF loans, 65% of which went overseas.]
I remember some murmurs about Foreign Lending at the time of the TBTF Bailouts. Those were mostly discounted as "unfounded". Hmmm ... Houston, seems like we have found something.
The U.S. Fed, must take their cues from that famous Disney song: "it's a small world after all, it's a small world after all ..." What's a few trillion in credit between multi-nationals?
I find a few pictures are usually helpful too in deciphering (and sharing) all this obscure "small print":
larger
How about putting those foreign TAF Loans, in a graph:
larger
But TAF was only one slice (or "tranche", in Wall Street-ese) of that truly immense bailout-out Pie ... as this Grayson point of interest, tallies up on page 131. Where was OUR slice of this $16 Trillion dollar Pie?
larger
How can we hold them to account, if we don't bring to light, these trivial Trillion Dollar findings?
Thank you Senator Sanders. Thank you Representative Grayson.
Those two Leaders, represent the interests of working class Americans far more than our typical musical-chair clowns in DC, who equate Leading, with getting Re-elected. There is a huge difference, as these two patriotic public servants, Sanders and Grayson, well know.
Leading, involves much, much more than simply jumping back on that same old ride ... simply replaying the same old tune ...
Leading involves ... actually challenging the Status Quo. And actually holding those 1% Interests to account.