You thought TARP was bad? Previously undisclosed details on what the bank bailout looked like.
The linked article lays out the extent to which the Fed went ballistic in the wake of the 2008 crash. Trillions of dollars were thrown around in an effort to “recapitalize” the system.
Somewhere in the mix the big banks were able to extract about $13 billion for themselves. Mind you many of these banks would have gone down into the abyss without the Fed funny money.
I am actually amazed that they were only able cull $13 billion in light of the dollars spinning in and out of accounts.
It is also important to keep in mind that the banks that benefited from the largess of the Federal Reserve are also the ones foreclosing on people. That seems pretty fair. Sorry Mr. and Mrs. Jones, you are not welcome at the Fed window.
The brazenness of bank leadership during that time was amazing. For example:
Then B of A Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.
It seems also that even senior people at the Fed had no idea of the size of the Fed bailout.
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.”
The saddest part of all is that nothing has really been solved. The only difference is that once things start to fall again the situation will be much worse because of the economic façade erected by the Fed over the past 3 years.
Kudos to Bloomberg for getting this information out of the Fed.