Audit: Fed gave $16 trillion in emergency loans

[SkinsHokieFan]

http://www.rawstory.com/rs/2011/07/21/audit-fed-gave-16-trillion-in-emergency-loans/

The U.S. Federal Reserve gave out $16.1 trillion in emergency loans to U.S. and foreign financial institutions between Dec. 1, 2007 and July 21, 2010, according to figures produced by the government's first-ever audit of the central bank.

Last year, the gross domestic product of the entire U.S. economy was $14.5 trillion.

Of the $16.1 trillion loaned out, $3.08 trillion went to financial institutions in the U.K., Germany, Switzerland, France and Belgium, the Government Accountability Office's (GAO) analysis shows.

Additionally, asset swap arrangements were opened with banks in the U.K., Canada, Brazil, Japan, South Korea, Norway, Mexico, Singapore and Switzerland. Twelve of those arrangements are still ongoing, having been extended through August 2012.

Out of all borrowers, Citigroup received the most financial assistance from the Fed, at $2.5 trillion. Morgan Stanley came in second with $2.04 trillion, followed by Merill Lynch at $1.9 trillion and Bank of America at $1.3 trillion.

The audit also found that the Fed mostly outsourced its lending operations to the very financial institutions which sparked the crisis to begin with, and that they delegated contracts largely on a no-bid basis. The GAO report recommends new policies that would eliminate such conflicts of interest, and suggests that in the future the Fed should keep better records of their emergency decision-making process.

Click link for rest

To think, 4 years ago it was blasphemy to consider auditing the Fed.

Thank you Ron Paul

And Bernie Sanders is absolutley correct.

http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

"....As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

[Captain Wiggles]

Damn where's my emergency federal loan? Even if it's only 1% of the amounts mentioned.

[China]

So of these "loans" how much has been paid back?

[Burgold]

So of these "loans" how much has been paid back?

$42.67

[TimmySmith]

Amazing how the number exactly mirrors our proposed debt. Just call in the markers and we are all on easy street. I have already raised our bond rating to AAAA.

[bird_1972]

Amazing how the number exactly mirrors our proposed debt. Just call in the markers and we are all on easy street. I have already raised our bond rating to AAAA.

I would love nothing more than to see that happen.

Too bad our government (both parties) are beholden to Wall Street. Thank you Reagan and thank you deregulation - you have created a monster!!

[Larry]

Actually, what jumps off the page at me, in that article, is the dates. This was going on for like nine months before we suddenly announced out of the blue that there was a problem.

[Fred Jones]

They have contacted Webster and altered the very definition of conflict of interest.

Getting to the point where it really doesn't matter who is in office. They all do stupid things, answer to no one, and expect majority of the people to pay for it.

And, everyone of the companies/banks they loaned money too still are paying their CEO's and share holders big money. F the little guy, raise fees, and keep the money rolling for the rich.

EDIT

Fed officials had strongly discouraged lawmakers from ordering the audit, claiming it may serve to undermine confidence in the monetary system.

No doh, you really think they want the American people to know about this? And, of course we have the right to know, it is public money they are spending.

[Stillers6SB]

So of these "loans" how much has been paid back?

They were short-term loans, generally repaid after 30 days.

The Fed's balance sheet is roughly $2.5 trillion, much of it in US Treasuries. The rest is mostly MBS guaranteed by Fannie, Freddie and Ginnie.

The $16 trillion total is misleading, since the outstanding loans to banks at any one time were closer to $1 trillion.

[Larry]

They were short-term loans, generally repaid after 30 days.

The Fed's balance sheet is roughly $2.5 trillion, much of it in US Treasuries. The rest is mostly MBS guaranteed by Fannie, Freddie and Ginnie.

The $16 trillion total is misleading, since the outstanding loans to banks at any one time were closer to $1 trillion.

So what you're saying is, they loaned out $1T, sixteen times?

[Stillers6SB]

So what you're saying is, they loaned out $1T, sixteen times?

That's much more accurate than the thread title (the individual loans were smaller and the turnover was much higher than 16).

http://www.scribd.com/doc/60553686/GAO-Fed-Investigation

[mjah]

They were short-term loans, generally repaid after 30 days.

The Fed's balance sheet is roughly $2.5 trillion, much of it in US Treasuries. The rest is mostly MBS guaranteed by Fannie, Freddie and Ginnie.

The $16 trillion total is misleading, since the outstanding loans to banks at any one time were closer to $1 trillion.

Well, that's boring.

WHERE'S MY OUTRAGE FUEL NOW?

[killerbee99]

Well, that's boring.

WHERE'S MY OUTRAGE FUEL NOW?

You wanna watch fox news.....even though these were loans that will all be ultimately paid back.......RAGEEEEEEEEEEEEEEEEE.

[PleaseBlitz]

The Fed made a profit on the bailouts.

http://finance.fortune.cnn.com/2011/07/08/surprise-the-big-bad-bailout-is-paying-off/

The bailout, by the numbers, clearly did work. Not only did it forestall a worldwide financial meltdown, but a Fortune analysis shows that U.S. taxpayers are coming out ahead on it -- by at least $40 billion, and possibly by as much as $100 billion eventually.

The rest of the article is long and has lots of numbers, so I dont expect anyone to read it, much less understand it.

---------- Post added July-22nd-2011 at 10:39 AM ----------

They were short-term loans, generally repaid after 30 days.

The Fed's balance sheet is roughly $2.5 trillion, much of it in US Treasuries. The rest is mostly MBS guaranteed by Fannie, Freddie and Ginnie.

The $16 trillion total is misleading, since the outstanding loans to banks at any one time were closer to $1 trillion.

TARP, which gets 99% of the attention, was outstanding all at one time. It makes up about 3% of the total bailout.

[mcsluggo]

Damn where's my emergency federal loan? Even if it's only 1% of the amounts mentioned.

jeez people.... what percentage of these were short term liquidity, or even overnight loans.

I get the feeling that people have NO CONCEPT of the level of trading that takes place, or what any of it means.

[footballhenry]

Honest question, is it constitutional to loan money to foreign banks and foreign companies? I understand you can argue perhaps for domestic but foreign? I'm not so sure myself. But then again, I think the Fed is illegal in the first place.