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Monday, August 22, 2011

Fed Secretly Loaned $1.2 Trillion to Bailout Wall Street

Power tends to corrupt, and absolute power corrupts absolutely...
Lord Acton
The following Bloomberg story is shocking, because it shows the absolute and secret power of the Federal Reserve and Ben Bernanke to do whatever they want to. The Congress, the President, and the American public have no control over the Fed. It can slip $1.2 trillion through secret financial cracks to whoever it wants. These secret liquidity lifelines from the Fed saved the jobs of tens of thousands of Wall Street bankers. Bankers who had spawned the very crisis they needed saving from. They should at least send a Christmas card to Ben Bernanke and the Federal Reserve for a very long time.

For example, at the same time Morgan Stanley was saying that it had "strong capital and liquidity positions" (at the end of September 2008) it was secretly borrowing over $107 billion from the Fed to keep the company from following Lehman Brothers into bankruptcy.

All these revelations beg the question: if the Fed could secretly lend $1.2 trillion to save hundreds of banks and financial institutions, why did they not lend a fraction of that at the beginning to save Lehman Brothers? That smaller action would have avoided the subsequent financial blood bath. The Fed is supposed to be the overseer of the financial markets, couldn't they see the dire consequences of letting Lehman fall?

This cabal of secret banker lords at the Federal Reserve will have to be toppled just like Muammar Gaddafi is being toppled today in Libya.

Bradley Keoun and Phil Kuntz / Bloomberg:
Wall Street Aristocracy Got $1.2T in Loans -- 
Citigroup Inc. and Bank of America Corp. were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.

By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret...

Data gleaned from 29,346 pages of documents obtained under the Freedom of Information Act and from other Fed databases of more than 21,000 transactions make clear for the first time how deeply the world’s largest banks depended on the U.S. central bank to stave off cash shortfalls. Even as the firms asserted in news releases or earnings calls that they had ample cash, they drew Fed funding in secret, avoiding the stigma of weakness....
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Two weeks after Lehman Brothers Holdings Inc.'s bankruptcy triggered a global credit crisis, Morgan Stanley countered concerns that it might be next to go by announcing it had 'strong capital and liquidity positions.'
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Morgan Stanley, along with Citigroup Inc., and Bank of America Corp., were the biggest borrowers under seven Fed emergency-lending programs. The three banks' combined $298.2 billion in hidden Fed loans was triple what they received in publicly disclosed bailouts from the U.S. Treasury.
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The Fed’s Secret Liquidity Lifelines
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discussion:

ZeroHedge:
Visualizing What $1.2 Trillion In Secret Fed Bailouts To The Banking Kleptocracy Looks Like

Joe Coscarelli / New York Magazine:
Wall Street Secretly Borrowed $1.2 Trillion From the Fed

Phil Villarreal / The Consumerist: 

John Hinderaker / Power Line:   

Reliapundit / THE ASTUTE BLOGGERS:  

Tdog / The Talking Dog:  
 
Captain Renault / Man Are We Screwed: 

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