In the midst of the global financial crisis in 2008, the Federal Reserve lent Goldman Sachs, Credit Suisse and Royal Bank of Scotland at least $30 billion each at interest rates as low as 0.01 percent with no public disclosure of the details, Bloomberg News reported on Thursday. "It just points out that this was about secrecy to protect banks basically from embarrassment from transparency, which... [more]
In the midst of the global financial crisis in 2008, the Federal Reserve lent Goldman Sachs, Credit Suisse and Royal Bank of Scotland at least $30 billion each at interest rates as low as 0.01 percent with no public disclosure of the details, Bloomberg News reported on Thursday.
"It just points out that this was about secrecy to protect banks basically from embarrassment from transparency, which is not supposed to be what the Fed's about," said Dean Baker, co-director of the Center for Economic Policy and Research, in Washington.
"That is the fundamental problem with the Fed," Baker added. "They're supposed to be an agency of the government, not an agency of the banks. But reflexively, there they are protecting the banks, again and again and again."
http://www.huffingtonpost.com/2011/05/26/federal-reserve-emergency-loans-secret_n_867729.html[less]
Response by Riversider
over 14 years ago
Posts: 13572
Member since: Apr 2009
Units of 20 banks were required to bid at auctions for the cash. They paid interest rates as low as 0.01 percent that December, when the Fed’s main lending facility charged 0.5 percent.
“This was a pure subsidy,” said Robert A. Eisenbeis, former head of research at the Federal Reserve Bank of Atlanta and now chief monetary economist at Sarasota, Florida-based Cumberland Advisors Inc. “The Fed hasn’t been forthcoming with disclosures overall. Why should this be any different?”
“I wasn’t aware of this program until now,” said U.S. Representative Barney Frank, the Massachusetts Democrat who chaired the House Financial Services Committee in 2008 and co- authored the legislation overhauling financial regulation. The law does require the Fed to release details of any open-market operations undertaken after July 2010, after a two-year lag.
“At such low interest rates, it’s no longer a rescue, it’s a profit-making enterprise,” Michael Greenberger, , a professor at the University of Maryland School of Law in Baltimore and former director of the division of markets and trading at the Commodities Futures Trading Commission. said. “By December, a lot of money was made off this program.”
http://www.bloomberg.com/news/2011-05-26/fed-gave-banks-crisis-gains-on-secretive-loans-as-low-as-0-01-.html
Ignored comment.
Unhide
Response by memito
over 14 years ago
Posts: 294
Member since: Nov 2007
What do people really think was going on?
I will say this again, but the policies enacted were as if the planet was hit by an asteriod that destroyed a vast amount of economic capacity.
The government's policies are in place to protect the top 5% of the world's economic class... they might think they are doing otherwise, but that is the reality.
Ignored comment.
Unhide
Response by deanc
over 14 years ago
Posts: 407
Member since: Jun 2006
interesting Americans still claim that the chinese are interfering in the currency markets keeping the yuan low......
Ignored comment.
Unhide
Response by Riversider
over 14 years ago
Posts: 13572
Member since: Apr 2009
Well it's only fair that the banks get to borrow at the same rates the rest of us earn on our deposits.
Ignored comment.
Unhide
Response by NYCMatt
over 14 years ago
Posts: 7523
Member since: May 2009
"That is the fundamental problem with the Fed," Baker added. "They're supposed to be an agency of the government, not an agency of the banks. But reflexively, there they are protecting the banks, again and again and again."
This is completely wrong.
The Federal Reserve has never been an "agency" of the government, nor was that ever its intended purpose. It has ALWAYS been an agency by and for the private banks. It took on the name "FEDERAL" Reserve System to give it an air of government legitimacy, but that's all it is -- airs.
Units of 20 banks were required to bid at auctions for the cash. They paid interest rates as low as 0.01 percent that December, when the Fed’s main lending facility charged 0.5 percent.
“This was a pure subsidy,” said Robert A. Eisenbeis, former head of research at the Federal Reserve Bank of Atlanta and now chief monetary economist at Sarasota, Florida-based Cumberland Advisors Inc. “The Fed hasn’t been forthcoming with disclosures overall. Why should this be any different?”
“I wasn’t aware of this program until now,” said U.S. Representative Barney Frank, the Massachusetts Democrat who chaired the House Financial Services Committee in 2008 and co- authored the legislation overhauling financial regulation. The law does require the Fed to release details of any open-market operations undertaken after July 2010, after a two-year lag.
“At such low interest rates, it’s no longer a rescue, it’s a profit-making enterprise,” Michael Greenberger, , a professor at the University of Maryland School of Law in Baltimore and former director of the division of markets and trading at the Commodities Futures Trading Commission. said. “By December, a lot of money was made off this program.”
http://www.bloomberg.com/news/2011-05-26/fed-gave-banks-crisis-gains-on-secretive-loans-as-low-as-0-01-.html
What do people really think was going on?
I will say this again, but the policies enacted were as if the planet was hit by an asteriod that destroyed a vast amount of economic capacity.
The government's policies are in place to protect the top 5% of the world's economic class... they might think they are doing otherwise, but that is the reality.
interesting Americans still claim that the chinese are interfering in the currency markets keeping the yuan low......
Well it's only fair that the banks get to borrow at the same rates the rest of us earn on our deposits.
"That is the fundamental problem with the Fed," Baker added. "They're supposed to be an agency of the government, not an agency of the banks. But reflexively, there they are protecting the banks, again and again and again."
This is completely wrong.
The Federal Reserve has never been an "agency" of the government, nor was that ever its intended purpose. It has ALWAYS been an agency by and for the private banks. It took on the name "FEDERAL" Reserve System to give it an air of government legitimacy, but that's all it is -- airs.