28 November 2011

Bigger Scandal: How Big Banks Bailouts Scammed Trillions Not Billions


From Denny:  $7.77 trillion is how much the Big Banks leveraged from our taxpayer TARP bailouts of only billions.  How did they get the federal government to give them more than the original bailout?   Read on and line up an early appointment for your anger management class.  Trust me; you are so going to need it. 

Before the bailout the Big Banks only had a financial hold of less than 40 percent of the banking sector.  Now?  Because of this leveraging they now control over 67 percent and growing, growing like their outrageous fat CEO billion dollar bonuses and billion dollar company quarterly profits where they fee us to death.



In fact, after receiving the $700 billion safety net of the TARP bailout (Troubled Asset Relief Program) those same Big Banks had the nerve to lobby against government regulations to prevent them from ending up in the same financial black hole yet again.  "Do ya think?" that Stupid is running Wall Street or what?

How did this finally come to light when the Federal Reserve and the Big Banks have fought for years to conceal the truth?  The Big Banks even refused to give details of just how bad their financial situation was to Congress that was giving them money.  That means that Congress basically gave them a blank check while writing their signature in the dark.  With what recently came to light you can bet there are plenty of lawmakers wanting to change that vote.

Turns out that Bloomberg LP, the parent of Bloomberg News, recently won a victory in a court case against the Federal Reserve and the Clearing House Association, LLC (a group comprised of the biggest United States banks).

That win forced the lending details out into the open for all to see of the financial crisis from 2007 to 2009.  It came in the form of 29,000 Federal Reserve documents obtained under the Freedom of Information Act and 21,000 transactions from central bank records.

The same Fed that kept this huge secret for years now claims that almost all of the loans were paid and there were no losses.  But what has emerged is something far more troubling:  there was secret funding that helped to preserve a broken status quo that enabled the biggest of the Big banks to grow ever larger.  In short, taxpayers paid a higher price than just dollars as it has affected the entire economy and how we do business every day.

From Senator Sherrod Brown (D-Ohio), one of the responsible politicians who had introduced an unsuccessful bill in 2010 to limit the size to which banks can grow, “When you see the dollars the banks got, it’s hard to make the case these were successful institutions. This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”

So, how did this billion dollar bailout snowball into trillions?  It's a cumulative effect for sure and trust it to the Wall Street bankers to figure out how to be opportunists and take advantage as much as they could.  The Federal Reserve ended up committing $7.77 trillion in guarantees and lending limits to rescue the financial system.

From Rep. Brad Miller (D-North Carolina), House Financial Services Committee, "With the Fed programs, there was nothing.”  The Fed programs did nothing to limit the program's executive-pay ceiling.

The outrageous amount of money that our central bank parceled out was astounding even to Gary H. Stern, himself president of the Federal Reserve Bank of Minneapolis from 1985 to 2009.  He says even he "was not aware of the magnitude."  It certainly dwarfed the TARP program.  In fact, that $7.77 trillion was more than half the value of everything produced right here in America when they rescued the financial system in 2009.

What we all want to know is how is it that even high-ranking Federal Reserve officials did not know the extent of this bailout?  Who comprised the small group making these decisions and when will they be properly questioned? 


 

Guess how much profit those same Big Banks earned from those TARP bailouts?  Try the cha-ching tune of $13 billion.  The Big Six Big Banks are JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley.  The Big Six accounted for $4.8 billion of that $13 billion in ill-gotten gain profits.  Yes, those Big Banks were legendary crooks that snookered the American public and Congress.

So, here's how the crooked scenario goes:  The Big Six received $160 billion in TARP funds and $460 billion from the Federal Reserve.  The program for the entire bailout was leveraged to almost $8 trillion in loans, guarantees and limits.

With all the red ink flowing the details of this financial fiasco were kept hidden by our own Federal Reserve.  Their reasoning was that the secret was necessary because it would spook investors and panic the public to start bank runs, that, in turn, would devastate the shaky economy.  Read that as they didn't want to go to jail or lose their own money in the process. 

What is more astounding is how these same Big Banks continue to make huge loans with only half the amount of cash to cover them.  Don't even get me started on the derivatives market where the ratio is more outrageous like 40 to 1. 

It's the derivatives market that caused the need for the TARP program in the first place.  To date, nothing has been done to restrict or properly regulate these Big Banks from sending us into another financial recession, depression or global economic collapse. 

While the Federal Reserve contends that these Big Banks are "too big to fail" there are many in Congress that contend just the opposite.  A bank that is "too big to fail" is a bank too big to exist.  Perhaps now is the time to revisit Senator Sherrod Brown's legislation to limit the size of banks in this country. Or, in the common man's language:  Break up the Big Banks, NOW!



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