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The US Federal Reserve Board secretly handed out trillions of dollars in virtually free loans to major American and European banks at the height of the financial crisis between 2007 and 2010, according to an article posted Sunday by Bloomberg News. The article, based on an independent investigation carried out by Bloomberg of previously sealed Federal Reserve documents, is headlined “Wall Street Aristocracy Got $1.2 Trillion in Loans from Fed.”
The amount cited in the headline is somewhat misleading, as it refers only to the highest single-day amount of outstanding Fed loans under seven emergency programs the US central bank launched to cover the bad debts of the Wall Street elite. The $1.2 trillion figure is undoubtedly lower than the total amount in loans disbursed over the course of the programs’ existence, including loans to banks that came to the Fed for money multiple times.
The amounts involved were far greater than the cash injections provided the banks under the US Treasury’s $700 billion Troubled Asset Relief Program (TARP). Under that program, the ten biggest US banks received a total of $160 billion in cash, while, according to Bloomberg, they obtained $669 billion in emergency loans from the Fed.
The article quotes Robert Litan, a former Justice Department official who in the 1990s served on a commission investigating the savings and loan crisis “These are whopping numbers,” he said. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.”
The Bloomberg report sheds additional light on the manner in which the American capitalist state, under Bush and then Obama, looted the public treasury to bail out the financial elite, and the colossal scale of the sums involved. Money–taxpayer money, that is–was no object when it came to protecting the wealth of the parasites who triggered the financial crash and economic slump with their Ponzi schemes. Yet when it comes to helping millions of families losing their homes to foreclosure or providing jobs to the unemployed, the universal cry is “There is no money!”
The Bloomberg article points out, for example, that the $1.2 trillion peak in emergency Fed loans reached on December 8, 2008 roughly equals the $1.27 trillion in unpaid principal on 4.38 million US homes whose owners are delinquent on their mortgage payments and the 2.16 million properties that are already in foreclosure.
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