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Where'd the Bailout Money Go? Shhhh, It's a Secret
2008-12-22, ABC News/Associated Press
http://abcnews.go.com/Business/wireStory?id=6508158

It's something any bank would demand to know before handing out a loan: Where's the money going? But after receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending the money or they simply refuse to discuss it. "We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,"' said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to." The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest? None of the banks provided specific answers. "We're not providing dollar-in, dollar-out tracking," said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars. The answers highlight the secrecy surrounding the Troubled Assets Relief Program, which earmarked $700 billion—about the size of the Netherlands' economy—to help rescue the financial industry. There has been no accounting of how banks spend that money. "It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry," said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout. But, at least for now, there's no way for taxpayers to find that out.

Note: For more key information that the bankers don't want you to know, click here. For many revealing reports from reliable sources on the realities of the Wall Street bailout, click here.

Bank Bonuses Far Exceeded Profits
2009-07-30, CBS News
http://www.cbsnews.com/stories/2009/07/30/business/main5197668.shtml

Several financial giants that received federal bailout money in the last year paid out bonuses to employees in 2008 that greatly exceeded the amount of profit generated by the banks, according to a study on executive compensation released by New York State Attorney General Andrew Cuomo Thursday. Despite claims by bank executives that bonuses are tied to the company's performance, the report states that "there is no clear rhyme or reason to how the banks compensate or reward their employees." Cuomo's investigation "suggests a disconnect between compensation and bank performance that resulted in a 'heads I win, tails you lose' bonus system." According to the report: • Goldman Sachs, which earned $2.3 billion last year and received $10 billion in TARP funding, paid out $4.8 billion in bonuses in 2008 - more than double their net income. • Morgan Stanley, which earned $1.7 billion last year and received $10 billion in bailout funds, handed out $4.475 billion in bonuses, nearly three times their net income. • JPMorgan Chase, which earned $5.6 billion in 2008 and received $25 billion from the government, paid out $8.69 billion in bonus money. • Citigroup and Merrill Lynch lost a combined $54 billion last year. They received a total of $55 billion in bailouts and paid out $9 billion in combined bonuses. ($5.33 billion for Citigroup; $3.6 billion for Merrill Lynch, which was subsequently acquired by Bank of America.) Bonuses have been a hot-button issue surrounding these federally bailed out banks for months, with company executives facing heat from ... local officials like Cuomo angered by the exorbitant compensation plans for the same people widely seen as responsible for the country's financial crisis.

Note: Click here to read the full report. For lots more on the realities behind the taxpayer bailout of Wall Street, click here.

How Goldman secretly bet on the housing crash
2009-11-01, Kansas City Star/McClatchy Newspapers
http://www.kansascity.com/437/story/1542453.html

In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting. Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled one of the nation's premier investment banks to pass most of its potential losses to others before a flood of mortgage loan defaults staggered the U.S. and global economies. Only later did investors discover that what Goldman promoted as triple-A investments were closer to junk. Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy Newspapers investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws. "The Securities and Exchange Commission should be very interested in any financial company that secretly decides a financial product is a loser and then goes out and actively markets that product or very similar products to unsuspecting customers without disclosing its true opinion," said Laurence Kotlikoff, a Boston University economics professor who's proposed a massive overhaul of the nation's big banks. "This is fraud and should be prosecuted."

Note: For an eye-opening, powerful PBS video which reveals how the economic crisis was conscously allowed to happen, click here. It reveals that Fed chairman Alan Greenspan was against investigating any fraud. For many reports from reliable sources on corruption at the core of the Wall Street collapse and bailout, click here.

Sticker Shock: $23.7 Trillion Bailout?
2009-07-21, ABC News
http://abcnews.go.com/Business/Politics/story?id=8140184

"The total potential federal government support could reach up to $23.7 trillion," says Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, in a report released today on the government's efforts to fix the financial system. "The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn't even imaginable," said Rep. Darrell Issa, R-Calif., ranking member on the House Oversight and Government Reform Committee. "If you spent a million dollars a day going back to the birth of Christ, that wouldn't even come close to just $1 trillion -- $23.7 trillion is a staggering figure." The government has about 50 different programs to fight the current recession, including programs to bail out ailing banks and automakers, boost lending and beat back the housing crisis. So far they've cost taxpayers around $4 trillion. But Barofsky says if each federal agency spent the maximum potential amount involved in these initiatives, taxpayers could be on the hook for trillions more. The watchdog also warned today that hundreds of billions of taxpayer dollars could be lost if the government does not increase the transparency of the TARP program, which he says has grown to an unprecedented scope and scale. Requiring TARP recipients to report on how government funds are used is among the recommendations urged by Barofsky. He also wants the department to report on the values of its TARP portfolio so taxpayers know about the value of their investments.

Note: For a treasure trove of revelations from reliable sources on the hidden realities behind the Wall Street bailout, click here.

'Bailout psychology' destroying the economy
2009-04-05, San Francisco Chronicle (San Francisco's leading newspaper)
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/04/04/INR316Q4F5.DTL

President Obama must stop the bailouts and start the prosecutions. It's time to focus on anti-poverty programs to protect the growing unemployed from hunger and homelessness. Stealth payments to billionaire bondholders must cease immediately. Since the mid-1970s, average Americans' wages have stayed flat when adjusted for inflation. Productivity rose, profits rose, but not wages. To compensate for stagnant wages and the desire to consume more each year, Americans worked more, retired later, spouses went to work, and many burned savings. Then they started borrowing. Debt became America's growth industry. The scheme collapsed because Americans' wages weren't sufficient to pay the interest on existing debts. The administration and the banks keep talking about a credit crisis, but there isn't one. Banks are lending. If you want a mortgage and can afford to pay it back, you can borrow at low rates today. But most Americans don't want more debt because it is a debilitating path to poverty. The average American family already pays 14 percent of annual income in interest to banks. To fix this fake crisis, there are fake discussions about what the government must do. The endlessly recycled plan to buy "troubled" assets isn't to get banks lending again, because they haven't stopped lending. The plan seeks for taxpayers to buy worthless assets at high prices to absorb rich investors' losses. That's it. It keeps coming back as a different plan, but with that same goal. There is no goal beyond that one goal: keep rich people from taking losses.

Note: For an extensive archive of key reports on the hidden realities of the Wall Street bailout, click here.

The $700 trillion elephant
2009-03-06, MarketWatch (Wall Street Journal Digital Network)
http://www.marketwatch.com/news/story/The-700-trillion-elephant-room/story.as...

There's a $700 trillion elephant in the room and it's time we found out how much it really weighs on the economy. Derivative contracts total about three-quarters of a quadrillion dollars in "notional" amounts, according to the Bank for International Settlements. These contracts are tallied in notional values because no one really can say how much they are worth. But valuing them correctly is exactly what we should be doing because these comprise the viral disease that has infected the financial markets and the economies of the world. Try as we might to salvage the residential real estate market, it's at best worth $23 trillion in the U.S. We're struggling to save the stock market, but that's valued at less than $15 trillion. And we hope to keep the entire U.S. economy from collapsing, yet gross domestic product stands at $14.2 trillion. Compare any of these to the derivatives market and you can easily see that we are just closing the windows as a tsunami crashes to shore. The total value of all the stock markets in the world amounts to less than $50 trillion, according to the World Federation of Exchanges. To be sure, the derivatives market is international. But much of the trouble we're in began with contracts "derived" from the values associated with U.S. residential real estate market. These contracts were engineered based on the various assumptions tied to those values. Few know what derivatives are worth. I spoke with one derivatives trader who manages billions of dollars and she said she couldn't even value her portfolio because "no one knows anymore who is on the other side of the trade."

Note: Banks and financial firms deemed "too big to fail" are being bailed out worldwide at taxpayers' expense. But what will happen if losses in the derivatives market skyrocket? No government in the world has the resources to save financial corporations from a collapse in their derivatives trading. For lots more on the realities of the Wall Street bailout, click here.

The Madoff Economy
2008-12-19, New York Times
http://www.nytimes.com/2008/12/19/opinion/19krugman.html?partner=rss&emc=rss&...

The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend. Yet ... how different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole? The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated. High pay on Wall Street was a major cause of that divergence. Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials ... who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms ... politicians have walked when money talked. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion.

Note: This entire, penetrating article is well worth a read at the link above. For many revealing reports from reliable sources on the realities of the Wall Street bailout, click here.

US diluted loan rules before crash
2008-12-01, ABC News/Associated Press
http://abclocal.go.com/wpvi/story?section=news/business&id=6532267

The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents. "Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job. Bowing to aggressive lobbying - along with assurances from banks that the troubled mortgages were OK - regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way. The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s. Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. In 2005, faced with ominous signs the housing market was in jeopardy, bank regulators proposed new guidelines for banks writing risky loans. Those proposals all were stripped from the final rules.

Note: For many revealing reports on the Wall Street bailout from reliable sources, click here.

All Fall Down
2008-11-26, New York Times
http://www.nytimes.com/2008/11/26/opinion/26friedman.html?partner=rss&emc=rss...

I spent Sunday afternoon brooding over a [New York Times] front-page article, entitled ["Citigroup Saw No Red Flags Even as It Made Bolder Bets”]. In searing detail it exposed ... how some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn’t only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics. So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so. Citigroup was involved in, and made money from, almost every link in that chain. And the bank’s executives, including ...the former Treasury Secretary Robert Rubin, were ... so ensnared by the cronyism between the bank’s risk managers and risk takers (and so bought off by their bonuses) that they had no interest in stopping it. These are the people whom taxpayers bailed out on Monday to the tune of what could be more than $300 billion.

Note: For many revealing reports on the Wall Street bailout from major media sources, click here.

Treasury gives banks multi-billion tax break windfall
2008-11-11, San Francisco Chronicle/Associated Press
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/11/BUTP141OVI.DTL

Some of the nation's biggest banks are in for a windfall – on top of the $700 billion government bailout – thanks to a new tax policy quietly issued by the Treasury Department. The notice gives big tax breaks to companies that acquire struggling banks hit hard by the mortgage crisis. In some cases, the tax breaks could exceed the cost of acquiring the banks, according to analyses by private tax experts. The change could cost the Treasury as much as $140 billion by enabling firms that acquire struggling banks to use more losses incurred by those banks to offset their own taxable profits. San Francisco's Wells Fargo & Co., which made a bid to acquire Wachovia Corp. just days after the notice was issued, stands to reap about $20 billion in additional tax savings because of the change, according to the analyses. Wells Fargo paid $14.8 billion in a stock deal to buy Wachovia. The notice was issued Sept. 30 as Congress debated the $700 billion bailout plan. Some members of Congress are upset that such a sweeping tax change was issued with no public hearings or congressional input. "I am concerned that the notice, which was never debated by Congress, could end up costing taxpayers tens of billions of more dollars on top of the hundreds of billions of dollars already approved by Congress in the financial rescue plan," Sen. Chuck Schumer, D-N.Y., said in a letter last week to Treasury Secretary Henry Paulson. Some tax lawyers questioned the legality of the notice. Before the notice was issued, the merged bank could write off only a limited amount of the losses. The notice removed those restrictions, enabling the acquiring banks to make huge reductions in their tax liabilities.

Note: With no limitations placed on the nine biggest banks receiving many billions of dollars in bailout money, they are free to buy up smaller banks. And they will likely receive huge tax breaks, sometimes even greater than the purchase price, for doing so! For many revealing, reliable reports on the Wall Street bailout, click here.

New Terrain for Panel on Bailout
2008-11-04, New York Times
http://www.nytimes.com/2008/11/04/business/economy/04bailout.html?partner=rss...

Having been handed vast authority and almost no restrictions in the bailout law that Congress passed ... a committee of five little-known government officials, aided by a bare-bones staff of 40, is picking winners and losers among thousands of banks, savings and loans, insurers and other institutions. It is new and unfamiliar terrain for the officials, who are making monumental decisions — a form of industrial policy, some critics say — that contradict the free market philosophy they usually espouse. Predictably, the process is stirring alarm from Capitol Hill to Wall Street. Among the problems, critics say, is that despite earlier promises of transparency, the process is shrouded in secrecy, its precise goals opaque. Treasury officials have refused to disclose their criteria for deciding which banks ... get money. And officials have yet to say they even have a broader strategy, though banking executives are convinced the government wants to encourage acquisitions. Already, critics from Capitol Hill to Wall Street are lashing out at the program, saying the banks are misusing the capital infusions by hoarding the money rather than lending it. The government, the critics say, is wrongly steering funds to banks to take over weaker rivals. All this comes after Mr. Paulson abruptly shifted the focus of the program to injecting capital rather than buying distressed mortgage-related assets from the banks. This meant that Congress had never debated the details of how the government ought to carry out a recapitalization.

Note: With the intense secrecy and all of the lobbyist and big guns for banking fighting for hundreds of billions of dollars given practically free by the government, do you really think these "five little-known government officials" will be impartial in their decisions? For many revealing, reliable reports on the Wall Street bailout, click here.

So When Will Banks Give Loans?
2008-10-25, New York Times
http://www.nytimes.com/2008/10/25/business/25nocera.html?partner=rssuserland&...

“Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?” It was Oct. 17, just four days after JPMorgan Chase’s chief executive, Jamie Dimon, agreed to take a $25 billion capital injection courtesy of the United States government, when a JPMorgan employee asked that question [during] an employee-only conference call. The JPMorgan executive who was moderating the employee conference call didn’t hesitate to answer. “What we ... think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way.” Read that answer as many times as you want — you are not going to find a single word in there about making loans to help the American economy. On the contrary: It is starting to appear as if one of Treasury’s key rationales for the recapitalization program — namely, that it will cause banks to start lending again — is a fig leaf, Treasury’s version of the weapons of mass destruction. In fact, Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation. Treasury would even funnel some of the bailout money to help banks buy other banks. And, in an almost unnoticed move, it recently put in place a new tax break, worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: “It couldn’t be clearer if they had taken out an ad.”

Note: Was the real purpose of the "bailout" to strengthen the biggest banks by enabling them to gobble up the smaller ones at the public's expense? No wonder the legislation was rushed through without discussion! For lots more highly revealing reports on the Wall Street bailout, click here.

Cluster bomb trade funded by world's biggest banks
2009-10-29, The Guardian (One of the UK's leading newspapers)
http://www.guardian.co.uk/business/2009/oct/29/banks-fund-cluster-bomb-trade

The deadly trade in cluster bombs is funded by the world's biggest banks who have loaned or arranged finance worth $20bn (£12.5bn) to firms producing the controversial weapons, despite growing international efforts to ban them. HSBC, led by ordained Anglican priest Stephen Green, has profited more than any other institution from companies that manufacture cluster bombs. The British bank ... has earned a total of £657.3m in fees arranging bonds and share offerings for Textron, which makes cluster munitions described by the US company as "leaving a clean battlefield". HSBC will face protests outside its London headquarters today. Goldman Sachs, Bank of America, JP Morgan and UK-based Barclays Bank are also named among the worst banks in a detailed 126-page report by Dutch and Belgian campaign groups IKV Pax Christi and Netwerk Vlaanderen. Goldman Sachs, the US bank which made £3.19bn proft in just three months, earned $588.82m for bank services and lent $250m to Alliant Techsystems and Textron. Last December 90 countries, including the UK, committed themselves to banning cluster bombs by next year. But the US was not one of them. So far 23 countries have ratified the convention. The UK has yet to do so.

Note: For many verifiable revelations of war profiteering by large corporations, click here.

Voices of Power: Elizabeth Warren
2009-10-08, Washington Post
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/08/AR20091008007...

LOIS ROMANO: Welcome, Elizabeth Warren, Chairman of the Congressional Oversight Committee that is tasked with scrutinizing how the Treasury Department has spent $700 billion to shore up our failing financial institutions. There's a wonderful moment [in the movie "Capitalism: a Love Story"] when [Michael Moore] asks you where the $700 billion is, and you look at him and you say, "I don't know." So the question is: why don't you know? WARREN: Well, we don't know where the $700 billion is because the system was initially designed to make sure that we didn't know. When Secretary Paulson first put this money out into the banks, he didn't ask "what are you going to do with it?" He didn't put any restrictions on it. He didn't put any tabs on where it was going to go; in other words, he didn't ask. And if you don't ask, no one tells. And so we have a system that originally put more than $200 billion into the financial institutions basically saying just take it. ROMANO: And that money is gone. You have not been able to track where that money is? WARREN: Well, we don't know where the money went from the financial institutions. The big conversation at the time was that the credit markets are frozen; if we put money into the financial institutions, they will start lending it because that's what they do when they receive money. It was called the "Healthy Banks Program." Secretary Paulson kept saying, over and over, these are investments in healthy financial institutions, no one needs any subsidy, that [the] money was going to be used in lending to small businesses and consumers and kind of get our whole credit market going again. That didn't happen.

Note: To watch a powerfully revealing, five-minute video showing the Inspector General of the Federal Reserve testifying that she doesn't know where trillions of dollars are, click here. For a comprehensive overview of the realities underlying the government's bailout of the biggest financial institutions, click here.

Fed Would Be Shut Down If It Were Audited, Expert Says
2009-06-10, CNBC News
http://www.cnbc.com/id/31204170

The Federal Reserve's balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit, Jim Grant, editor of Grant's Interest Rate Observer, told CNBC. With $45 billion in capital and $2.1 trillion in assets, the central bank would not withstand the scrutiny normally afforded other institutions, Grant said. "If the Fed examiners were set upon the Fed's own documents ... to pass judgment on the Fed's capacity to survive the difficulties it faces in credit, it would shut this institution down," he said. "The Fed is undercapitalized in a way that Citicorp is undercapitalized." Grant said he would support legislation currently making its way through Congress calling for an audit of the Fed. Moreover, he criticized the way the Fed has managed the financial crisis, saying the central bank's target rate should not be around zero. "I think zero is the wrong rate for almost any economy," Grant said, adding the Fed has "embarked on a vast experiment in moral hazard. Interest rates are the traffic signals in a market economy, and everything's green. ... You have to wonder whether these interest rates are the right clearing rate or rather they are the imposition of a central bank." Amid a disparity between analysts predicting there will be no rate hikes soon and the fed funds futures indicating tightening by the end of the year, Grant said he thinks the Fed indeed will begin raising rates as inflation creeps into the picture. Fed funds futures have fully priced in as much as a half-point rise in the target rate from its current range of zero to 0.25 percent. "If the hairs on the back of your neck stand up when there's too much unanimity of opinion, then one begins to worry about this," he said. "The Fed proverbially has been late."

Note: For an astonishing five-minute video clip of a Congressional hearing where the Inspector General of the Fed acknowledges she knows almost nothing about trillions of dollars missing from the Fed, click here. For many more important reports shedding light on the hidden realities of the economic crisis, click here.

Fed Shrouding $2 Trillion in Bank Loans in ‘Secrecy,’ Suit Says
2009-04-16, Bloomberg News
http://www.bloomberg.com/apps/news?pid=20601087&sid=aS89AaGjOplw

U.S. taxpayers need to know the risks behind the Federal Reserve’s $2 trillion in lending to financial institutions because the public is now an “involuntary investor” in the nation’s banks, according to a court filing by Bloomberg LP. The Fed refuses to name the borrowers, the amounts of loans or assets banks put up as collateral under 11 programs, arguing that doing so might set off a run by depositors and unsettle shareholders. The largest U.S. banks have tapped more than $125 billion in government aid under the Troubled Asset Relief Program in the past seven months. Assets, including loans and securities, on the Fed balance sheet totaled $2.09 trillion as of April 9. Banks oppose any release of information because that might signal weakness and spur short-selling or a run by depositors, the Fed argued in its March 4 response. The release of the information “can fuel market speculation and rumors,” including a drop in stock price and a run on the bank, the Fed said. Bloomberg replied yesterday that “these speculative injuries relate only to the reactions of customers, shareholders and other members of the public, not to competitors’ use of the borrowers’ proprietary information to their advantage,” the exception to disclosure under the FOIA law. Government loans, spending or guarantees to rescue the U.S. financial system total more than $12.8 trillion since the international credit crisis began in August 2007, according to data compiled by Bloomberg as of March 31. The total includes about $2 trillion on the Fed’s balance sheet.

Note: For an extensive archive of key reports on the hidden realities of the Wall Street bailout, click here.

‘No-Risk’ Insurance at F.D.I.C.
2009-04-07, New York Times
http://www.nytimes.com/2009/04/07/business/07sorkin.html?partner=rss&emc=rss&...

The Federal Deposit Insurance Corporation was set up 76 years ago with the important but simple job of insuring bank deposits. Now, because of what could politely be called mission creep, it’s elbowing its way into the middle of the financial mess as an enabler of enormous leverage. In the fine print of Treasury Secretary Timothy F. Geithner’s plan to lend as much as $1 trillion to private investors to help them buy toxic assets from our nation’s banks, you’ll find some details of how the F.D.I.C is trying to stabilize the system by adding more risk, not less, to the system. It’s going to be insuring 85 percent of the debt, provided by the Treasury, that private investors will use to subsidize their acquisitions of toxic assets. These loans, while controversial, were given a warm welcome by the market when they were first announced. And why not? The terms are hard to beat. They are, for example, “nonrecourse,” which means that if an investor loses money, he owes taxpayers nothing. It’s the closest thing to risk-free investing — with leverage! — around. But, as we’ve learned the hard way these last couple of years, risk-free investing is an oxymoron. So where did the risk go this time? To the F.D.I.C., and ultimately, to us taxpayers. A close reading of the F.D.I.C.’s statute suggests the agency is using a unique — some might call it plain wrong — reading of its own rule book to accomplish this high-wire act. Somehow, in the name of solving the financial crisis, the F.D.I.C. has seemingly been given a blank check, with virtually no oversight by Congress.

Note: For a powerfully revealing archive of reports from reliable sources on the hidden realities of the financial bailout, click here.

Fed Refuses to Disclose Recipients of $2 Trillion
2008-12-12, Bloomberg News
http://www.bloomberg.com/apps/news?pid=20601109&sid=apx7XNLnZZlc

The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral. Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression. The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. “If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC. The Fed stepped into a rescue role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program. The central bank loans don’t have the oversight safeguards that Congress imposed upon the TARP. Total Fed lending exceeded $2 trillion for the first time Nov. 6. It rose by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA. “There has to be something they can tell the public because we have a right to know what they are doing,” said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press.

Financial Bailout Balloons to the Trillions
2008-11-25, ABC News
http://abcnews.go.com/Business/Economy/story?id=6332892

The government's financial bailout will be the most expensive single expenditure in American history, potentially costing around $7.5 trillion -- or half the value of all the goods and services produced in the United States last year. In comparison, the total U.S. cost of World War II adjusted for inflation was $3.6 trillion. The bailout will cost more than the total combined costs in today's dollars of the Marshall Plan, the Louisiana Purchase, the Korean War, the Vietnam War and the entire historical budget of NASA, including the moon landing, according to data compiled by Bianco Research. It remains to be seen whether the government's multipronged approach to bail out banks, stimulate spending and buy up mortgages will revive the economy, but as the tab continues to grow so does concern over where the government will find the money. Monday the government guaranteed an additional $306 billion to bail out Citigroup, and today Treasury Secretary Henry Paulson pledged $800 billion to make credit more available to consumers and small businesses, and to buy up mortgages from Fannie Mae and Freddie Mac. Congress last month allocated $700 billion for an emergency bailout of some of Wall Street's most storied firms by purchasing their troubled assets. The funds allocated through the Troubled Assets Relief Program are but a small part of the government's overall bailout spending. Bailout programs also include a Federal Reserve plan to buy as much as $2.4 trillion in short-term notes called commercial paper that began Oct. 27, and an FDIC plan to spend $1.4 trillion to guarantee bank-to-bank loans that commenced Oct. 14, according to Bloomberg News, which first compiled the total cost of the bailout.

Note: $7.5 trillion amounts to about $25,000 for every person in the U.S. What's going on here? For many revealing reports on the realities of the Wall Street bailout, click here.

Paulson makes it clear: He's in charge
2008-11-13, San Francisco Chronicle (San Francisco's leading newspaper)
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/13/BUUK1439IF.DTL

Henry Paulson's speech Wednesday made it pretty clear: The Treasury secretary has seized control of the financial system. "He is absolutely the most powerful person in the country. Maybe the world," says Wall Street accounting expert Robert Willens. The most telling line in his speech came when Paulson was explaining why he did a 180-degree turn with money approved by Congress under the $700 billion bailout bill. Instead of using it to buy troubled mortgage assets from banks, as clearly envisioned, he scrapped that idea and used it to make equity investments in banks. "In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks," he said. If Paulson bothered consulting with President Bush, he didn't mention it. In fact, he didn't even mention the president until the tail end of his speech, when he talked about the global summit Bush is hosting this weekend. I can understand why Paulson wants to distance himself from an unpopular president, especially one who has little facility for complex financial matters. But Bush is [the] president and even President-elect Barack Obama knows there can be only one president at a time. And his last name is not Paulson. In September, when Paulson asked for a $700 billion blank check from Congress to fix the financial markets, he got a lot of blowback. By the time Congress was done with his proposal, it had grown from 2 1/2 pages to more than 450. Yet it now appears that Paulson got the blank check he wanted.

Note: Why doesn't Congress have some say in what is done with this $700 billion? That's over $3,000 for every taxpayer in the U.S. which is being spent with practically no accountability. Is this what democracy looks like? For many key articles revealing the hidden realities of the bailout, click here.

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