Share

Tweet

Bernie Sanders begins: "At a Senate Budget Committee hearing in
2009, I asked Fed Chairman Ben Bernanke to tell the American people the names of
the financial institutions that received an unprecedented backdoor bailout from
the Federal Reserve, how much they received, and the exact terms of this
assistance. He refused."

Senator Bernie Sanders (I-Vt.), 03/11/09. (photo:
WDCpix)

A Real Jaw Dropper at the Federal Reserve

By Sen. Bernie Sanders

03 December 10

t a
Senate Budget Committee hearing in 2009, I asked Fed Chairman Ben Bernanke to
tell the American people the names of the financial institutions that received
an unprecedented backdoor bailout from the Federal Reserve, how much they
received, and the exact terms of this assistance. He refused. A year and a half later, as a result of an
amendment that I was able to include in the Wall Street reform bill, we have
begun to lift the veil of secrecy at the Fed, and the American people now have
this information.

It is unfortunate that it took this long, and it is a shame that
the biggest banks in America and Mr. Bernanke fought to keep this secret from
the American public every step of the way. But, the details on this bailout are
now on the Federal Reserve's website, and this is a major victory for the
American taxpayer and for transparency in government.

Importantly, my amendment also required the Government
Accountability Office to conduct a top-to-bottom audit of all of the emergency
lending the Fed provided during the financial crisis to be completed on July 21,
2011, which will take a hard look at all of the potential conflicts of interest
that took place with respect to this bailout. So, in many respects, details that
the Fed was forced to divulge on Wednesday about the $3.3 trillion in emergency
loans that until now were totally kept from public scrutiny, marked the
beginning, not the end, of lifting the veil of secrecy at the Fed.

After years of stonewalling by the Fed, the American people are
finally learning the incredible and jaw-dropping details of the Fed's
multi-trillion-dollar bailout of Wall Street and corporate America. As a result
of this disclosure, other members of Congress and I will be taking a very
extensive look at all aspects of how the Federal Reserve functions and how we
can make our financial institutions more responsive to the needs of ordinary
Americans and small businesses.

What have we learned so far from the disclosure of more than
21,000 transactions? We have learned that the $700 billion Wall Street bailout
signed into law by President George W. Bush turned out to be pocket change
compared to the trillions and trillions of dollars in near-zero interest loans
and other financial arrangements the Federal Reserve doled out to every major
financial institution in this country. Among those are Goldman Sachs, which
received nearly $600 billion; Morgan Stanley, which received nearly $2 trillion;
Citigroup, which received $1.8 trillion; Bear Stearns, which received nearly $1
trillion, and Merrill Lynch, which received some $1.5 trillion in short term
loans from the Fed.

We also learned that the Fed's multi-trillion bailout was not
limited to Wall Street and big banks, but that some of the largest corporations
in this country also received a very substantial bailout. Among those are
General Electric, McDonald's, Caterpillar, Harley Davidson, Toyota and
Verizon.

Perhaps most surprising is the huge sum that went to bail out
foreign private banks and corporations including two European megabanks -
Deutsche Bank and Credit Suisse - which were the largest beneficiaries of the
Fed's purchase of mortgage-backed securities.

Deutsche Bank, a German lender, sold the Fed more than $290
billion worth of mortgage securities. Credit Suisse, a Swiss bank, sold the Fed
more than $287 billion in mortgage bonds.

Has the Federal Reserve of the United States become the central
bank of the world?

The Fed said that this bailout was necessary to prevent the
world economy from going over a cliff. But three years after the start of the
recession, millions of Americans remain unemployed and have lost their homes,
life savings and ability to send their kids to college. Meanwhile, big banks and
corporations have returned to making huge profits and paying their executives
record-breaking compensation packages as if the financial crisis they started
never happened.

What this disclosure tells us, among many other things, is that
despite this huge taxpayer bailout, the Fed did not make the appropriate demands
on these institutions necessary to rebuild our economy and protect the needs of
ordinary Americans.

For example, at a time when big banks have nearly a trillion
dollars in excess reserves parked at the Fed, the Fed did not require these
institutions to increase lending to small- and medium-sized businesses as a
condition of the bailout.

At a time when large corporations are more profitable than ever,
the Fed did not demand that corporations that received this backdoor bailout
create jobs and expand the economy once they returned to profitability.

I intend to investigate whether these secret Fed loans, in some
cases, turned out to be direct corporate welfare to big banks that used these
loans not to reinvest in the economy but rather to lend back to the federal
government at a higher rate of interest by purchasing Treasury Securities.
Instead of using this money to reinvest in the productive economy, I suspect a
large portion of these near-zero interest loans were used to buy Treasury
Securities at a higher interest rate providing free money to some of the largest
financial institutions in this country. That is something that we have got to
closely examine.

At a time when Wall Street executives are now making more money
than before the financial crisis, how many big banks that paid back TARP funds
in 2009 to avoid limits on executive compensation received no-strings-attached
loans from the Federal Reserve?

At a time when millions of Americans are paying outrageously
high credit card interest rates, why didn't the Fed require credit card issuers
to lower interest rates as a condition of the bailout?

The four largest banks in this country (Bank of America, JP
Morgan Chase, Wells Fargo, and Citigroup) issue half of all mortgages in this
country. We now know that these banks received hundreds of billions from the
Fed. How many Americans could have remained in their homes, if the Fed required
these bailed-out banks to reduce mortgage payments as a condition of receiving
these secret loans?

We have begun to lift the veil of secrecy at one of most
important agencies in our government. What we are seeing is the incredible power
of a small number of people who have incredible conflicts of interest getting
incredible help from the taxpayers of this country while ignoring the needs of
the people.

Comments

+53 #
Elaine Swanson 2010-12-03 21:11

Senator Sanders,I listen to you
nearly every Friday morning on Thom Hartman's radio show. I wish the USA had 49
more senators as committed as you to the welfare of this country. Thank you for
all you do.
Reply
| Reply
with quote | Quote

+20 #
rumigirl 2010-12-04
00:28

Quoting

Senator Sanders,I listen to you nearly every Friday morning on
Thom Hartman's radio show. I wish the USA had 49 more senators as committed as
you to the welfare of this country. Thank you for all you
do.

Make that 99 senators and 435 representatives
.
Reply
| Reply
with quote | Quote

+28 #
Suzie Christmas 2010-12-04 05:27

Quoting

Senator Sanders,I listen to you nearly every Friday morning on
Thom Hartman's radio show. I wish the USA had 49 more senators as committed as
you to the welfare of this country. Thank you for all you
do.

They would all be shot or politically assassinated like
what they did to Elliot Spitzer. Spitzer had written an Op-Ed for the NYT, just
a week before the whole prosititute incident, about the mortgage fraud. Did
anybody notice no one else was arrested in the prostitution scam? Bernie, like
Paul Wellstone, should stay out of small planes.
Reply
| Reply
with quote | Quote

+16 #
Paul Ravenstone 2010-12-04 06:00

I knew something wasn't right
about all of that when it was going down, but I had no clue what... Now, I am
completely blown away. Thank you for fighting for transparency!
Reply
| Reply
with quote | Quote

+5 #
Darlene F. Price 2010-12-05 06:46

Great job Senator Sanders!!!! Keep
speaking truth to power!!!!
Reply
| Reply
with quote | Quote

+18 #
Ken Hall 2010-12-03
22:19

Yes, Senator Sanders is one of the
few in the federal gov't who advocate for the interests of those citizens who
are less than mega-rich.
Reply
| Reply
with quote | Quote

+16 #
Sandy Steubing 2010-12-03 22:27

Thank heavens for Senator Sanders,
He is one of the few government representatives I listen to and
believe.
Reply
| Reply
with quote | Quote

+19 #
Kristen 2010-12-03
23:07

Senator Sanders, I thank you for
your work to get to the truth about the Federal Reserve, but I still don't get
why you and everyone else in government and the media refer to that institution
as a part of our government. The Federal Reserve is a privately held bank which
has never been a part of the American government.
It is fascinating to me
that many citizens are discussing this truth, but Congress seems to not know
this. Well, of course they do, but the real question is why aren't they
admitting this fact?
For a good education in this masquerade just read "The
Creature from Jekyll Island" by G. Edward Griffin- (1994). The Creature from
Jekyll Island: A Second Look at the Federal Reserve (1st ed., 2d ed. 1995, 3d
ed. 1998 American Media, 4th ed. 2002, now in 6th ed.). Appleton, WI: American
Opinion Publishing. ISBN 0912986166. OCLC 31354943.
Of course you know about
it already, but have you read it?
Again, thanks for your courage- it must be
lonely in those halls of judgment.
Reply
| Reply
with quote | Quote

-3 #
political economist 2010-12-04 18:58

Sorry but please take a good
economics course before you write abut this. The fed really is part of the
government. It is established by law and it makes a healthy profit almost all of
which is turned over to the federal government.
Reply
| Reply
with quote | Quote

+4 #
Monkeerench 2010-12-04 20:03

That's b.S., you go take a course.
The Fed is not at all a "part" of the government, any more than
Congressionally
-created Fanny & Freddie were before they were put on the stock
market tickers by the bribing of politicos. The Fed is a "regulated"
Federally-sanctioned entity in the similar way that corporations are
"established by law" (state law), supposedly to be regulated by administrative
rules and regulations.
Reply
| Reply
with quote | Quote

0 #
Gary1 2010-12-06
06:21

Monkeerench - Give us the name of
ANY other not-for-profit corporation that has a CEO appointed by and serves at
the whim of the POTUS. And it's not a part of the federal government??
Please...
Reply
| Reply
with quote | Quote

+17 #
B. Julien 2010-12-03
23:27

Thank you so much Senator Sanders
for all you do. I cannot understand how so many of the rich in this country can
sleep at night knowing how they have destroyed life for so many of their fellow
Americans. Their greed is unbelievable. We must get these criminals out of our
Government.
Reply
| Reply
with quote | Quote

+14 #
AngryMan 2010-12-03
23:36

Mr. Sanders, I thank you for your
exceptional contributions. You are about the last caring person in politics.
When the others sold out, you stayed the course of honesty and integrity. That
is rare these days. You are truly a gem. I thank you.
Reply
| Reply
with quote | Quote

+11 #
Merschrod 2010-12-04
00:06

A great service to all - Thank you
"Bernie."

There should be a law against giving an institution government
money and allowing that same institution from then lending it back to the
government for a higher rate of return, or using it as reserves.

It is
definitely an indicator of corporativism and should be stopped.
Reply
| Reply
with quote | Quote

+15 #
futhark 2010-12-04
00:09

What else do you expect from an
institution and a government of, for, and by the plutocrats and other robber
barons?
Reply
| Reply
with quote | Quote

+17 #
GeraldT 2010-12-04
00:14

Thank God and thank you people of
Vermont for electing an Independent to Congress, rather than another
DemoRepubliCrat corporate shill. I am SO tired of watching these two
self-serving, sides the same coin groups pretend to fight and disagree to keep
the American public off balance while they BOTH pander to the ones paying for
their elections and under the table: the corporations.
Reply
| Reply
with quote | Quote

+12 #
hope asrelsky 2010-12-04 01:35

Another mind-blowing revelation
about the appalling power of the banks, enhanced and abetted by "our"
government. Sen. Sanders should be promoted, rewarded, considered the leader in
ethical principles in our cowardly, bought-off, dithering Senate.
Reply
| Reply
with quote | Quote

+8 #
Hors-D-whores 2010-12-04 01:40

Mr. Sanders, you're the best. I'm
no financial wizard but you explain it so well I even understand, and I'm angry
as heck.

Sometimes I think we have been drugged or something since we
the people should really be breaking some doors down. (Figuratively
speaking.)

Thank you Mr. Sanders.
Reply
| Reply
with quote | Quote

+16 #
Dan Fletcher 2010-12-04 02:09

I won't be satisfied in the least
until I see some bus loads of bankers being hauled off to prison and see that
this class of white colar criminals are forced to pay restitution and penalties,
severe penalties, to the American people.
Reply
| Reply
with quote | Quote

+13 #
Nels Wight 2010-12-04
03:53

Bravo, Bernie, the Julian Assange
of the Senate!
Reply
| Reply
with quote | Quote

+15 #
Terry 2010-12-04
04:34

And how many Senators were
indirectly compensated with bailout funds by lobbyists?

And why is the
government "obligated" to borrow money from private banking
institutions?

And why do the American people sit back and accept all of
this BS from their government?
Reply
| Reply
with quote | Quote

+4 #
eldoryder 2010-12-04
05:43

Amen to that, sister.
Reply
| Reply
with quote | Quote

+12 #
anne holder 2010-12-04 05:51

This article is worth its weight
in gold. I am so grateful for a Senator Sanders.
Reply
| Reply
with quote | Quote

+14 #
JCM 2010-12-04
07:49

Bernie Sanders for
President?
Reply
| Reply
with quote | Quote

+4 #
[email-masked] 2010-12-04 19:48

We should all urge Senator Sanders
to seek the presidency in 2012 and support his election campaign. He definitely
is presidential and will use the power of the office to get essential government
business done. Our current president, who I voted for, unfortunately has
well-demonstrated he is too weak for the job. I've finally and sadly come to
that conclusion watching Obama's unwillingness to firmly oppose extending the
obviously never affordable Bush tax cuts. He should have insisted on letting all
the Bush tax cuts expire and a moratorium on any future tax cuts until budget
deficits have been eliminated and the government's crushing debt significantly
paid down. Senator Sanders, are you listening?
Reply
| Reply
with quote | Quote

+9 #
Elisabeth Hair 2010-12-04 09:35

Seriously---thank God for Bernie
Sanders. He is a voice of truth and reason. Long may he serve.
Reply
| Reply
with quote | Quote

+5 #
lnmon A. Pitts 2010-12-04 09:45

How could this type of behavior
exist for so long. Greed is destroying America.
Reply
| Reply
with quote | Quote

+14 #
proud_lemming 2010-12-04 10:14

Though not an American, I try to
keep up on American politics, but am not as attentive as I should be.

So,
I am grateful to Sen. Sanders for illuminating the the "bail-out."

I've
also heard that Sen. Sanders is among the few US legislators not to become
apoplectic at the sound of the word "socialism," and may occasionally associate
himself with it.

Since he is a rare "truth-teller" with a good grasp of
economics, maybe it's time for American citizens to connect the
dots.

Socialism is a credible economic theory with beneficial practical
consequences for citizens. Nordic nations, continental European countries and
parliamentary democracies like the UK, Canada and Australia are all "socialist"
by US standards (universal health care, etc.). They are also more equitable,
healthy. democratic and safer than the US, which is at or near the bottom of
most OECD measures of quality of life(most recently in child poverty, health and
education).

Maybe Americans could dare to experiment with something other
than 18th-century homilies to individual greed. Adam Smith worked well in
preindustrial times. Postindustrial? Not so much.
Reply
| Reply
with quote | Quote

+10 #
Barbara Krimgold 2010-12-04 11:05

Senator Sanders,
I wish there
were more like you in the Senate and in the country. Thanks for protecting what
is left of the country and of our democracy from the encroaching corporatocracy
of the past few decades.
Barbara Krimgold
PS Please give Obama some
backbone.
Reply
| Reply
with quote | Quote

+6 #
proud_lemming 2010-12-04 11:53

Here's the multi-trillion dollar
question: Does Mr. Obama lack "backbone," or is the basically on the side of
those he seems afraid to try to control?

We all heard a lot about "change
you can believe in," but seldom was any specific proposal discussed (and those
that were, such as Guantanamo closing or DADT being rescinded, have since been
set aside).

On the other hand, the president did promise to escalate the
war in Afghanistan, which he has - apparently to no good effect; and, in a
casual moment, he summed up his economic thinking in the phrase, "I'm a
free-market kind of guy."

That seems about right. He has sought (and
failed) to modify corporate behavior, but he has never tried to reform it in any
but cosmetic ways (e.g., taking the "single-payer option" off the table before
negotiations about health insurance began).

So what do we have? Corporate
capitalism with a human face!
Reply
| Reply
with quote | Quote

+6 #
FED UP 2010-12-04
11:07

Thanks, Senator, for reminding us
why we elected people to Congress. And why we are right in suspecting that real
power lies in the hands of corporate america, especially the huge financial
institutions. These are not just a few "bad apples." This is endemic to a system
void of a moral sense and ruled by values of growth, profitability, and
greed.
Reply
| Reply
with quote | Quote

+4 #
joe w. heyer 2010-12-04 12:15

I second all that has been said in
the previous comments. Thank you and please keep up your work. You are one of
the few hopes that we have.
Reply
| Reply
with quote | Quote

+4 #
Judy Moore 2010-12-04
12:52

I consider politicians to be the
lowest form of life; that is all except Senator Sanders.
Thank you for your
courage and honesty. That is probably not an easy thing to be in modern day
Washington, D.C..
Reply
| Reply
with quote | Quote

+12 #
Marcus 2010-12-04
13:18

Sanders/Kucinich in 2012! God, I
wish.
Reply
| Reply
with quote | Quote

+2 #
Gary Epstein 2010-12-04 13:41

Goldman Sachs $600
billion
Morgan Stanley $2,000 billion
Citigroup $1,800 billion
Bear
Stearns $1,000 billion
Merrill Lynch $1,500 billion
This adds up to $6,900
billion or $6.9 trillion
I cannot understand where Bernie got $3.3
trillion.
Reply
| Reply
with quote | Quote

+1 #
Dan Fletcher 2010-12-04 17:40

I am curious to know about this as
well. Anyone have any ideas?
Reply
| Reply
with quote | Quote

0 #
Gary1 2010-12-06
05:55

This discrepancy comes from
Senator Sanders habit of throwing numbers around that support his political
agenda while anticipating that pounding his fist on the lectern will distract
your attention away from the obvious.

The numbers from the five banks
listed above - in addition to many, many other banks that do the same thing -
are the "short term" overnight loans that the Fed normally provides. They have
zero to do with TARP or other loans that were provided, but "bernie" knows that
he can get away with throwing some "big numbers" around to impress anyone whohe
can get to listen to him and they won't question him. Is this the same
transparency that he seeks so feverishly? Set an example and "walk the talk". He
is only representing the State of Vermont because his home state of Rhode Island
kicked him out on his hiney long ago. He has learned the art of "yell loud
enough and you drown out any voice of dissension so people have to listen to
you".
Reply
| Reply
with quote | Quote

+3 #
Monkeerench 2010-12-04 19:52

Great article and great work
Senator.

However, the "Federal" Reserve Bank is not at all an agency of
the Federal government. It is a private entity held by private owners, under
Federal regulation when the largely corporately-owned politicos have the guts to
regulate it. It replaced J. P. Morgan as a supposedly "last resort" to bail out
the US economy when unregulated, excessive speculators' greed tanked it.

I wish you would propose the only Constitutional recourse, seize the Fed
as a truly Federal entity, pay off it's owners (cheap, really) and put the
responsibility for the national currency back in the hands of the US Treasury
where it belongs. Any other course spells ultimate disaster for the US and world
economies.
Reply
| Reply
with quote | Quote

+1 #
Mark 2010-12-05
17:19

I'd like to see President Sanders,
but I'm always reminded of the story about Adlai Stevenson. After one of his
campaign speeches, a woman said to him, "Governor, you'll get the vote of every
thinking person." He replied, "Madam, that's not good enough; we need a
majority."
Reply
| Reply
with quote | Quote

-1 #
Daniel Fletcher 2010-12-06 00:13

Quoting

I'd like to see President Sanders, but I'm always reminded of the
story about Adlai Stevenson. After one of his campaign speeches, a woman said
to him, "Governor, you'll get the vote of every thinking person." He replied,
"Madam, that's not good enough; we need a majority."

Oh
God...I'm torn between laughing and crying. This could be the truth. How
sad.
Reply
| Reply
with quote | Quote

0 #
remoran111 2010-12-05
18:20

The Fed is a cartel protected by
government, a non profit registered in Delaware. Go to www.beyondrealtime.com
and type in Happy Birthday. The info will amaze you as to how the Fed was
created and who the players were who did the deed.
Reply
| Reply
with quote | Quote

Refresh
comments list
RSS feed for comments to this post.

Name (required)

E-mail (required)

Notify me of
follow-up comments

Send

Cancel

Login or Register Login Register
Password?
| Username?

Username

Password

Remember Me
Close

Name:

*

Username:

*

E-mail:

*

Password:

*

Confirm password:

*

Fields marked with an asterisk (*) are
required.

Register
Close

Go

Natural Disaster Civilian Security Military Contractors Religion Iran Middle East Human Rights US Military Politics Media Civil Rights Labor Health Care Economy Environment Congress White House Afghanistan Iraq Peace War Marc Ash Scott Galindez Juan Cole Robert Reich Paul Krugman John Cory

Daniel
Ellsberg's Goodbye Letter to Amazon

by Daniel Ellsberg, AntiWar.Blog

03 December 2010

Joe
Lieberman Knocks WikiLeaks Off Amazon Servers

by Amy Davidson, The New Yorker

02 December 2010

Obama's
Captors

by Frank Rich, The New York Times

05 December 2010

A
Real Jaw Dropper at the Federal Reserve

by Sen. Bernie Sanders

03 December 2010

WikiLeaks
vs. The Empire

by Tom Hayden, The Peace and Justice Resource
Center

03 December 2010

The
American Jobs Emergency

by Robert Reich, Robert Reich's Blog

04 December 2010

Freezing
Out Hope

by Paul Krugman, The New York Times

03 December 2010

Imperial
Retreat

by Neal Ascherson, Guardian UK

05 December 2010

Sen.
Bernie Sanders: Our (Wealth-Dominated) Banana Republic

by Sen. Bernie Sanders

04 December 2010

PRIVACY
POLICY

TERMS OF
USE

CONTACT
US

WHO IS
THIS?

© 2010 Reader Supported
News