Florida foreclosure defense attorney and legal blogger Roy Oppenhem is wondering if we are playing the game Truth or Consequences.
How ironic that a second grade teacher gets in trouble for telling her class that Santa isn’t real, but the Federal Reserve and big banks think it’s OK to keep details of the largest bailout in U.S. history a secret?
Truths – What we didn’t know
- The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day.
- Bankers took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy.
- No one calculated until now that banks reaped an estimated $14 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
- Taxpayers (that means you!) paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.
- The total numbers are staggering: $7.7 trillion of credit—one-half of the GDP of the entire nation. $460 billion was lent to J.P. Morgan, Bank of America, Citibank, Wells Fargo, Goldman Sachs, and Morgan Stanley alone—without anybody other than a few select officials at the Fed and the Treasury knowing.
Consequences – What we now know
- The loans didn’t help to stimulate the job market in anyway — Unemployment rate increased by almost 50 percent, to a nationwide average of 10 percent (even higher in Florida!!)
- In fact, some of the $14 billion profit from the bailout (an amount that was previously unknown to Congress) was used by the banks to lobby our politicians for new regulations, in order to prevent another bailout! Some was used to directly line the pockets of elected officials as campaign contributions.
- Bonuses and over-paid bankers were paid by loans from the taxpayer via the Federal Reserve.
The answer is simple: we all need to stop coddling the biggest banks that are too big and fat and focus on the banks that are lean and clean. After all, if banks want to be treated as people…remember obesity is a disease and needs to be cured.