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Fed lent banks nearly $8 trillion during crisis, report shows [View All]

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Playinghardball Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-28-11 01:53 PM
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Fed lent banks nearly $8 trillion during crisis, report shows
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Source: MSNBC

While the nation's largest banks were publicly reassuring nervous investors of their stability during the height of the financial crisis, they were also quietly approaching the Federal Reserve, hat in hand. The total price tag: $7.77 trillion, many times the amount of the better-known TARP bailout.

The magnitude of the government's assistance to struggling banks allowed them to grow even bigger and continue paying executives billions in compensation, a report in Bloomberg Markets January issue said Monday.

A win in court against a group representing the banks and a FOIA request filed by Bloomberg LP revealed the extent of the central bank's largesse as well as the $13 billion in profits banks earned from those bailouts. The so called "big six" JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley accounted for $4.8 billion of that total nearly a quarter of their net income during that time.

Those borrowed trillions were a deeply-buried secret. It appears that even high-ranking Fed officials didn't know about the scale of the handouts. According to Bloomberg, then-president of the Federal Reserve Bank of Minneapolis Gary H. Stern wasnt aware of the magnitude, and unnamed sources say that even top aides to Treasury Department head Henry Paulson were kept in the dark.

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