More Bankster audacity: Taxpayer-financed arbitrage

[marmar]

from HuffPost:



Largest Banks Likely Profited By Borrowing From Federal Reserve, Lending To Federal Government
Posted: 04/26/11 05:27 PM ET


A newly-released study from the Congressional Research Service bolsters claims that the nation's largest banks profited off the Federal Reserve's financial crisis-era programs by borrowing cash for next to nothing, then lending it back to the federal government at substantially higher rates.

The report reinforces long-held beliefs that the banking system in essence engaged in taxpayer-financed arbitrage: They got money for free, then lent it back to Uncle Sam while collecting juicy returns. Left out of the equation are the millions of everyday borrowers, like households and small businesses, who were unable to secure loans needed to tide them over until the crisis ended.

The Fed released records under pressure in December and March that showed the extent of its largesse. The CRS study shows for the first time how some of the most sophisticated financial firms could have taken the Fed's money and flipped easy profits simply by lending it back to another arm of the government.

The report was requested by Sen. Bernie Sanders (I-Vt.), who likened the crisis-era emergency loans to "direct corporate welfare to big banks," in a statement. The cash likely was lent back to Uncle Sam in the form of Treasuries and other debt "instead of using the Fed loans to reinvest in the economy," Sanders added. ............(more)

The complete piece is at: http://www.huffingtonpost.com/2011/04/26/fed-lending-helped-wall-street_n_853884.html

[Celebration]

1. that's the whole idea

Our money isn't actually money, it is debt! They are supposedly recapitalizing the banks so they can lend money and get the economy started again.