The Truth Behind the Federal Reserve Drive Thru Window by Roy Oppenheim
Foreclosure fraud files are nothing these days. The latest secret reports from the Federal Reserve are hard to fathom for most people including myself. The report reiterates the notion that our nation ever so quickly resembles that of a crony capitalistic third-world regime. Thanks to Bloomberg Magazine, however, we now have a better picture how, as a country, we all have been played for a sucker. Especially the state of Florida being listed as one of the top foreclosure states.
So, it is no wonder Bloomberg had to mount a legal fight under the Freedom of Information Act before the Federal Reserve would turn over their scathing files. While the narrative is not necessarily new, the facts are beyond our wildest imagination.
Scheme, Scam and Shame
Simply put, the Federal Reserve loaned the largest banks in the United States and abroad $7.7 trillion – that’s right in 2008 and allowed the banks to buy U.S. Treasury bonds that netted the banks a neat little profit of $14 billion. To give some perspective here the $7.7 trillion equals three quarters of the gross domestic product of the United States for any one year or is three times the total aggregate consumer debt of all people living in the United States.
Federal Reserve Drive Thru Window – Banks Only
Now if you or I had tried to show up at the Fed’s “discount window” – that is what the facility is called where the largest banks received their $7.7 trillion, – we would never have even found the window to begin with. And should we have found the window we would have found that it is only open to the largest banks in the world.
The banks essentially get to borrow money at the equivalent of one-fifth of one percent per year or at an interest rate of 0.02 percent. Now, that is not two percent but one-tenth of two percent or 0.002.
Naturally, one would have thought that the loans given to the banks by the Federal Reserve, which is effectively an arm of the government, during the heat of the crisis would have been given to help prevent unemployment from increasing dramatically above the then 6.5 percent at that time.
Of course, as we all know because the funds were not used in any way to help the homeowner or the consumer the unemployment rate increased by almost 50 percent to 10 percent and even more in other places like Florida.
More Money for Banks = More Money for Banks
In retrospect you would think it was naive to assume bankers would do the right thing with the money other than to make more money for themselves. They used the funds to buy treasury bonds. They used these funds to create a $14 billion profit, a sum that was hidden from Congress until now.
Of course, the irony is that a portion of the $14 billion was used by the banks to lobby Congress to make sure that new regulations would not be put in place to prevent this kind of crisis from ever occurring again as well as to make campaign contributions to various elected officials.
Further the funds were used to pay out sized bonuses as well as wages well above the average for the same type of position outside of Wall Street and the banking industry.
Interestingly since the banks received these funds the biggest banks have become bigger than ever, as has the government. The distinction between the government, the Federal Reserve and the banking industry has become so confused and muddled and intertwined that it is at times impossible to know where one begins and where one ends. In fact one could argue that that relationship has become somewhat resembling of a human centipede.
The Silver Lining? Two Sets of Rules is Obvious
The only good news, if you can call it that, is that the average person can now see the double standard that exists; the two sets of rules that allow the banks and their enablers to literally game the system at our collective expense.
Just think, the banks borrowed $7 trillion and then effectively lent it back to the government: what a scheme, what a scam, and what a shame!
From The Trenches