The bank bailouts in 2008 left a bitter residue which even now, 7 years later (7 years!) I can taste. I spit it out, but it always lingers. If I meditate too long on that time, that time of foreclosures, and panic, and of George Bush “abandoning capitalism to save free market capitalism,” of weekend meetings at the Fed, of Hank Paulson playing God, my blood pressure still rises. It was such a tremendous scam on such a gigantic scale. Then 2 quarters after the bailouts Goldman Sachs paid out the biggest bonuses in its history. Many Americans were just trying to make ends meet. Some have never recovered.
(From The Daily Signal)
Warren and Vitter’s bill would require the Federal Reserve to loan at a penalty rate of interest five points above the Treasury’s lending rate at the time the loan is issued.
“The point here is not to give you below market rates so that we can subsidize you, the point is to say if you’re having to turn to the Fed for help in a crisis, then the Fed in that sense should be like other market lenders,” Warren said.
The legislation would retain the Federal Reserve’s role as a lender of last resort, but it would require big banks that take a loan to pay a price for it.
The bill also restricts the Federal Reserve from lending money to financial institutions during times of economic distress unless the problem is deemed “system-wide” and is the result of the market itself freezing, rather than the outcome of a poor business decision.