Secret Fed Loans Helped Banks Net $13B - Bloomberg

A fascinating, well researched story by Bloomberg of the massive bailout of banks during the 2008-2009 financial crisis and the secrecy surrounding it. Kudos to Bloomberg and their authors and editors for doing this. Clearly, the financial system was in jeopardy at the time and bold action was necessary. It's the secrecy that surrounded it that we find so egregious along with the fact that far too many bankers and the industry in general benefited to an unwarranted degree.


I'm no financial expert, but it seems to me that the finance industry and the Fed were in cahoots to keep Congress in the dark and, for the most part, impotent during this crisis. One could argue that haste was necessary and a dysfunctional Congress could not be trusted to do the right thing in a speedy fashion. Yet, what does it say about the resiliency of our democracy in time of crisis?


Sadly, these world-rattling events have further relegated Congress to irrelevancy in a time of financial crisis. We continue to see more of it with failure of the Super Committee to rationally rein in the deficits and debt, part of which arose from the frantic efforts to save the big banks and the financial system from collapse.

 "The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue."

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