Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts

Πηγή: Sott
Sept 1 2012

The first ever GAO (Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out.


Ben Bernanke (pictured above), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve's nearly 100 year history were posted on Senator Sander's webpage earlier this morning.

What was revealed in the audit was startling:

$16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world's banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious - the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is "only" $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is "only" $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.
"This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."- Bernie Sanders (I-VT)When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows..

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
and many many more including banks in Belgium of all placesView the 266-page GAO audit of the Federal Reserve (July 21st, 2011):

Sources:
US Government Accountability Office (GAO)
FULL PDF on GAO server.
Senator Sander's Article

Comment: It's not "socialism for the rich"; that's an oxymoron.

It's corporatism, i.e. fascism, as defined by Benito Mussolini.

Is Another Depression Possible?: A Comparison of "The Great Depression" and "The Great Recession"

Πηγή: Global Research
by Devon DB

Sep 30 2011

In 2007, the world became engulfed in the largest economic slump since the Great Depression. The crisis was so damaging it was coined “the Great Recession” and there was much comparison of the recession to the Great Depression of the 1930s in the mainstream media. However, what many failed to do was an in-depth analysis of both the Great Depression and the Great Recession, to compare and contrast to two. Thus, this article will be a comparison of both economic downfalls, ending in an analysis of the current economic situation America finds itself in and asking the question if another Great Depression is possible.

The decade prior to the 1930s, the US was in a time of great economic boom known as “The Roaring Twenties.” Yet while the nation’s income rose about 20% (from $74.3 billion in 1923 to $89 billion in 1929), the majority of this wealth went to the richest as can be seen by the fact that “in 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%” [1] and that the disposable income per capita rose 9% from 1920 to 1929, while the top 1% enjoyed a massive 75% increase in per capita disposable income. This greatly increased wealth disparity and led to a imbalance in the US economy where demand wasn’t equal to supply and thus there was an oversupply of goods as “those [the poor and the middle class] whose needs were not satiated could not afford more, whereas the wealthy were satiated by spending only a small portion of their income,” [2] which caused the US to become reliant on three things to keep the economy afloat: credit sales, luxury spending, and investment by the rich. However, the major flaw of an economy based on credit sales, luxury spending, and investments was that all three of those activities depended upon people’s confidence in the economy. If confidence were to lower, then those activities would come to a halt and with it the US economy.

The massive inequality in wealth was not solely in terms of socioeconomic status, but also extended to corporations as well. During the first World War, the federal government subsidized farms in earnest as they wanted to feed not only Americans, but also Europeans. However, once the war ended, so did subsidies for farms. The government began to support the automobile and radio industries, with help from then-President Calvin Coolidge in the form of pressuring the Federal Reserve to keep easy credit, as to allow for both industries to easily be heavily invested in.

In the 1920s, the profits of the automobile and its connected industries such as lead, nickel, and steel skyrocketed, so much so, that by 1929 “a mere 200 corporations controlled approximately half of all corporate wealth.” [3] The automobile boom also led to the creation of hotels and motels which in turn led “Americans spent more than a $1 billion each year on the construction and maintenance of highways, and at least another $400 million annually for city streets” [4] in the 1920s. In addition to the massive success of the automobile industry, the radio industry also preformed exceptionally well as “Radio stations, electronic stores, and electricity companies all needed the radio to survive, and relied upon the constant growth of the radio market to expand and grow themselves.” [5]

Missing: Tons of US-Supplied Nuclear Weapons Material

Πηγή: Mother Jones
By Adam Weinstein
Tue Sep. 13, 2011

The United States cannot fully account for more than 16,000 kilograms tons of weapons-grade uranium and plutonium that it has shipped to 27 "friendly" countries in recent decades, and it lacks any coherent policy to track down the materials, a Government Accountability Office report concluded late last week. In fact, according to auditors, the country's atomic accounting is so shoddy that the International Atomic Energy Agency—the same agency sent to search for Saddam Hussein's weapons of mass destruction—could potentially find the United States in violation of its international anti-proliferation treaty obligations. Even as it has fretted about Iranian nuclear proliferation and alleged Iraqi purchases of yellowcake uranium from Africa, the United States has lost track of enough fissile material to make hundreds of nuclear warhead cores.

At issue are bilateral agreements the US holds with 27 nations, from France to Taiwan, for the transfer of American nuclear materials—fuel, reactors, and reactor components—for "peaceful civilian purposes." (It's even conceivable, though not easily determined, that US material may have been present at the Marcoule nuclear plant in France where an explosion killed one worker Monday.) Although the United States has a database, the Nuclear Materials Management and Safeguard System, to track the transfers, the GAO found that the '50s-era system is more or less useless today: Most of the bilateral export agreements give the US no official power to supervise what happens with the uranium, plutonium, and other materials they fork over. Hence much of the material leaves American sight, and officials simply take the other nations' word that the stuff has ended up in a civilian reactor.

The Department of Energy (DOE) and the Nuclear Regulatory Commission, which oversee the export of nuclear material to US allies for use in atomic power plants, "do not have a comprehensive, detailed, current inventory of U.S. nuclear material—including weapon-usable material such as highly enriched uranium (HEU) and separated plutonium—overseas," the GAO report said. Worse still, on the rare occasions when State Department inspectors gained access to the allies' stockpiles of American radioactive products, all the way up to last year, "U.S. teams found that countries met international security guidelines approximately 50 percent of the time."

That's just for the countries that US inspectors actually visited—in other words, the countries that probably pose the smallest concern. "[T]he agencies have not systematically visited countries believed to be holding the highest proliferation risk quantities of U.S. nuclear material, or systematically revisited facilities not meeting international physical security guidelines in a timely manner," the GAO stated.

That could be a major violation of America's international treaty obligations. The Nuclear Nonproliferation Treaty, which the United States signed, requires that nuclear export agreements "should commit parties to establish and maintain a system of accounting for nuclear material, with a view to preventing diversion of nuclear energy from peaceful uses," the GAO report said.

The DOE's beleaguered atomic security arm, the National Nuclear Security Administration,issued an official response accusing the GAO of "errors in fact and judgment" in its report. "NNSA is working with other partners to secure weapons-usable nuclear materials in additional parts of the world and to strengthen security at civil nuclear and radiological facilities," wrote NNSA associate administrator Kenneth Powers. "We recognize that further work is needed and we are working with our partners to improve international security."

Privatized Social Security System Cited By GOP Candidates Works For The Rich, But Is ‘Very Bad’ For Everyone Else

Πηγή: ThinkProgress
By Pat Garofalo 

Sep 14, 2011

During Monday night’s GOP presidential primary debate, several the candidates called for privatizing Social Security, with former corporate CEO Herman Cain pointing to a system of privatized accounts for government employees that was implemented by Galveston, Texas. “In 1981, the Galveston County employees, they opted out because that was a very short window of opportunity. They took it. Today, when people retire in Galveston County, Texas, they retire making at least 50 percent more than they would ever get out of Social Security,” Cain claimed.

Texas Gov. Rick Perry has also praised the Galveston system, saying in his 2010 book Fed Up!that “employees in those private plans, having exercised their liberty at Washington’s sufferance, are reaping the benefits,” and adding in Monday’s debate “the issue is, are there ways to move the states into Social Security for state employees or for retirees? We did in the state of Texas back in the 1980s.”

As it turns out, this system did work well for some people: the wealthy. Everyone else would have been better off sticking with Social Security:

For the highest-earning workers in the Gulf Coast county, the personal accounts have yielded nearly double what they might have collected under Social Security. But according to independent studies, the results have been less favorable to those on the lower end of the income spectrum.

In 1999, the Social Security Administration and the General Accounting Office (now the Government Accountability Office) separately examined the program adopted by Galveston and surrounding counties and found that its benefits depended on income and longevity: The lower one’s income and the longer one lived after retirement, the less advantage there was to participating in the program compared with Social Security. Also, Social Security payments increased with inflation, while payments under the Galveston plan did not.

“If you’re single, if you’re well off and you die within 10 years [of retirement], maybe you’ve done better,” said Eric Kingson, a professor of social work at Syracuse University and a vocal critic of the Galveston alternative. “For most people, it’s somewhere between ‘very bad’ and ‘not very good.’ ”

“Low-income working persons do not receive anything approaching the kind of protection they receive under Social Security” under the Galveston plan, said Syracuse University professor Eric Kingson. Keith Brainard, the research director for the National Association of State Retirement Administrators, added that the problem “lies in Cain’s implication that Social Security should be a wealth-producing vehicle, when that’s not what it’s supposed to be. Social Security is supposed to be old-age insurance. That should be the emphasis of the program, not ‘retiring with a lot more money.’”

But for the GOP, it seems, Social Security (which kept 14 million seniors out of poverty last year) should no longer be a guarantee, but a program subjected to the whims of the stock market. And that would mean real trouble for retirees.

First Federal Reserve Audit Reveals Trillions in Secret Bailouts

Πηγή: The World News
By Matthew Cardinale

Monday, 29 August 2011

ATLANTA, Aug 28 (IPS) - The first-ever audit of the U.S. Federal Reserve has revealed 16 trillion dollars in secret bank bailouts and has raised more questions about the quasi-private agency's opaque operations.

"This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for
everyone else," U.S. Senator Bernie Sanders, an Independent from Vermont, said in a statement.

The majority of loans were issues by the Federal Reserve Bank of New York (FRBNY).

"From late 2007 through mid-2010, Reserve Banks provided more than a trillion dollars. in emergency
loans to the financial sector to address strains in credit markets and to avert failures of individual
institutions believed to be a threat to the stability of the financial system," the audit report states.

"The scale and nature of this assistance amounted to an unprecedented expansion of the Federal
Reserve System's traditional role as lender-of-last-resort to depository institutions," according to the
report.

The report notes that all the short-term, emergency loans were repaid, or are expected to be repaid.

The emergency loans included eight broad-based programmes, and also provided assistance for certain
individual financial institutions. The Fed provided loans to JP Morgan Chase bank to acquire Bear Stears,
a failed investment firm; provided loans to keep American International Group (AIG), a multinational
insurance corporation, afloat; extended lending commitments to Bank of America and Citigroup; and
purchased risky mortgage-backed securities to get them off private banks' books.

Overall, the greatest borrowing was done by a small number of institutions. Over the three years,
Citigroup borrowed a total of 2.5 trillion dollars, Morgan Stanley borrowed two trillion; Merryll Lynch,
which was acquired by Bank of America, borrowed 1.9 trillion; and Bank of America borrowed 1.3
trillion.

Banks based in counties other than the U.S. also received money from the Fed, including Barclays of the
United Kingdom, the Royal Bank of Scotland Group (UK), Deutsche Bank (Germany), UBS (Switzerland),
Credit Suisse Group (Switzerland), Bank of Scotland (UK), BNP Paribas (France), Dexia (Belgium),
Dresdner Bank (Germany), and Societe General (France).

"No agency of the United States government should be allowed to bailout a foreign bank or corporation
without the direct approval of Congress and the President," Sanders wrote.

In recent days, 'Bloomberg News' obtained 29,346 pages of documentation from the Federal Reserve
about some of these secret loans, after months of fighting in court for access to the records under the
Freedom of Information Act.

Some of the financial institutions secretly receiving loans were meanwhile claiming in their public
reports to have ample cash reserves, Bloomberg noted.

The Federal Reserve has neither explained how they legally justified several of the emergency loans, nor
how they decided to provide assistance to certain firms but not others.

"The main problem is the lack of Congressional oversight, and the way the Fed seemed to pick winners
who would be protected at any cost," Randall Wray, professor of economics at University of Missouri-
Kansas City, told IPS.

"If such lending is not illegal, it should be. Our nation really did go through a liquidity crisis - a run on
the short-term liabilities of financial institutions. There is only one way to stop a run: lend reserves
without limit to all qualifying institutions. The Fed bumbled around before it finally sort of did that,"
Wray said.

"But then it turned to phase two, which was to try to resolve problems of insolvency by increasing Uncle
Sam's stake in the banksters' fiasco. That never should have been done. You close down fraudsters,
period. The Fed and FDIC (Federal Deposit Insurance Commission) should have gone into the biggest
banks immediately, replaced all top management, and should have started to resolve them," Wray said.

Renewed questions about the Federal Reserve have inspired some young activists to organise grassroots
protests across the U.S.

"Since its creation by the U.S. Government in 1913, the Federal Reserve has created so much new
money out of thin air that it has destroyed 95 percent of the dollar's value," Joseph Brown, a college
student and one of the organisers of a recent protest of the Federal Reserve Bank of Atlanta, said.

"This hidden inflation tax benefits Wall Street and the government, but hurts the poor and those living
on fixed incomes, such as senior citizens, the most," Brown said.

The U.S. Government Accountability Office (GAO) audit itself was the result of at least two years of
grassroots lobbying. IPS reported in June 2009 a wide bi-partisan coalition of Members of Congress had
co-sponsored legislation to audit the Federal Reserve.

The audit was ordered as an amendment by Sanders as part of the Dodd-Frank Wall Street Reform and
Consumer Protection Act - a major banking overhaul passed by President Barack Obama and the U.S.
Congress in 2010.

"I think this (the first ever GAO audit) was a good start to uncovering what the Fed did so that we can
begin to determine whether similar actions should ever be permitted again," Wray wrote, adding, "my
preliminary answer is a resounding no."

The GAO also found existing Federal Reserve policies do not prevent significant conflicts of interest. For
example, "the FRBNY's existing restrictions on its employees' financial interests did not specifically
prohibit investments in certain non-bank institutions that received emergency assistance," the report
stated.

The GAO report noted on Sep. 19, 2008, William Dudley, who is now the President of the FRBNY, was
granted a waiver to let him keep investments in AIG and General Electric, while at the same time the
Federal Reserve granted bailout funds to the same two companies.

"No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit
on the Fed's board of directors or be employed by the Fed," Sanders said.

The GAO is currently working on a more detailed report regarding Federal Reserve conflicts of interest,
which is due on Oct. 18, 2011.

Federal Reserve System: GAO's Report to Congressional Addressees

Conclusions

During the financial crisis that began in the summer of 2007, the Federal Reserve System took unprecedented steps to stabilize financial markets and support the liquidity needs of failing institutions that it considered to
be systemically significant. Federal Reserve System staff often designed and implemented the emergency programs over the course of only days or weeks as they sought to address rapidly deteriorating market
conditions. To varying degrees, these emergency actions involved the Reserve Banks in activities that went beyond their traditional responsibilities. In particular, FRBNY, which implemented most of the assistance, faced a number of operational challenges related to implementing and overseeing several broad-based emergency programs, the three Maiden Lane portfolios, and other assistance to AIG and Citigroup. FRBNY hired vendors to help manage the complexities associated with its assistance to individual institutions and its
interventions in new markets, such as the markets for commercial paper and asset-backed securities. In addition, FRBNY had to create new policies, procedures, and controls to manage key risks within and across
the programs.

Over time, FRBNY and the other Reserve Banks took steps to improve program management and oversight, in many cases in response to recommendations made by their external auditor, Reserve Bank internal audit functions, or the Federal Reserve Board’s RBOPS. For example, FRBNY greatly expanded its risk management function in 2009, by, among other things, establishing a new risk management division and
creating a Risk Analytics group within this division to validate the valuation work performed by vendors on the Maiden Lane portfolios.

Expanded staff expertise in this and other areas has allowed FRBNY to be a more knowledgeable customer of vendor services. In addition, in May 2010, FRBNY issued a new vendor management policy to outline
guidelines and requirements for assessing and overseeing the risks posed by vendor firms. However, the Reserve Banks have not yet fully incorporated some lessons learned from the crisis into their policies for
managing use of vendors, risk of losses from emergency lending, and conflicts of interest. Such enhanced policies could offer additional insights to guide future Federal Reserve System action, should it ever be
warranted.

Vendors have been a critical component of helping create and operate the emergency programs, with most of the fees concentrated among a few contracts that were awarded without competition. While the Reserve
Banks followed their acquisition policies regarding vendor selection, the largest contracts were awarded under an exigency exception to the competition requirement in those policies. The acquisition policies did not
provide additional guidance on awarding contracts under exigency exceptions such as seeking as many proposals as practical or limiting the duration of contracts to the period of the exigency. Given the nature of the events leading to the emergency programs, it is reasonable to expect that future emergencies could follow a similar pattern of sudden financial shocks that leave the Reserve Banks little time to develop and implement
responses, including hiring vendors. Because exigent circumstances may limit the Reserve Banks’ ability to follow their normal acquisition procedures, taking steps to ensure that they seek as much competition as
is practicable is critical to the vendor selection process.

The emergency programs brought FRBNY into new relationships with institutions that fell outside of its traditional lending activities, and these changes created the possibility for conflicts of interest for both FRBNY
employees and vendors. FRBNY recognized the importance of identifying and managing conflicts related to employees’ access to sensitive information and to employees’ financial interests that were not specifically
prohibited in its Code of Conduct but could be affected by their participation in matters concerning these emergency programs. However, while FRBNY staff told us that they believe their existing policies and
guidance are sufficient for managing employee conflicts during a crisis situation, these policies may still allow for situations to arise in which the appearance of a conflict of interest for an FRBNY official could raise
questions about the integrity of FRBNY’s programs and operations. This possibility is of particular concern given the extraordinary sensitivity and potential importance of emergency lending activities. While FRBNY’s
current standards are consistent with 18 U.S.C. § 208 and its regulations, the lack of more specific procedures for managing conflicts during emergency lending activities exposes FRBNY to the risk of the
appearance of conflicts which can compromise FRBNY’s effectiveness by causing observers to question its integrity. The Federal Reserve System plans to update the Reserve Banks’ codes of conduct to reflect its
broader role in regulating systemically important institutions. These planned efforts present an opportunity to consider how recent experiences with managing employee conflicts might inform changes tothese policies. With respect to vendors, FRBNY has not yet finalized a policy for managing risks related to conflicts of interest in connection with its emergency programs. In contrast, Treasury articulated a detailed policy for managing TARP vendor conflicts of interest in January 2009.

FRBNY created a new vendor-management policy in 2010, but this policy is not sufficiently detailed or comprehensive in its guidance on steps FRBNY staff should take to help ensure vendor conflicts are mitigated. FRBNY staff have said they plan to develop a documented policy that codifies practices FRBNY put in place during the crisis. The lack of a comprehensive policy for managing vendor conflicts could expose
FRBNY to greater risk that it would not fully identify and appropriately manage vendor conflicts of interest in the event of future crisis situations.

While the Federal Reserve Board’s emergency lending programs included multiple loss-protection features and have not incurred losses to date, opportunities exist for the Federal Reserve System to improve its
risk management practices related to crisis lending. First, for TAF and the programs for the primary dealers, Reserve Banks’ existing policies lacked specific guidance on how staff should exercise discretion and document their actions to restrict or deny program access for otherwise eligible institutions that posed higher risk of losses. FRBNY staff recognized the importance of monitoring and restricting higher-risk institutions for these programs because institutions could pose unacceptable risks even though they continued to meet eligibility requirements. Since these programs closed, Reserve Banks have enhanced their guidance for
monitoring exposures to depository institutions and primary dealers, but revised guidance continues to lack details applicable to a crisis-driven lending situation. In addition, FRBNY staff indicated that the Federal
Reserve System has not assessed the consistency of TAF restrictions across the 12 Reserve Banks. Without more detailed procedures, Reserve Bank staff responsible for implementing future emergency programs may not take consistent and appropriate steps to mitigate the risks posed by higher-risk borrowers. Furthermore, without documentation and analysis of decisions to apply restrictions to particular borrowers and the processes that led to those restrictions, the Reserve Banks lack assurance that they are applied consistently across borrowers. Second, neither the Federal Reserve Board nor FRBNY quantified stress losses across all of the emergency programs and assistance. While FRBNY tracked potential losses under stressed scenarios for some programs, including CPFF and the Maiden Lane portfolios, FRBNY staff said they did not quantify stressed losses for TAF, TSLF, or PDCF. In a future crisis, without a more comprehensive view of risk exposures within and across Reserve Banks, the Federal Reserve Board may lack critical information needed to make decisions about authorizing and modifying its emergency lending activities.

FDSystem

16 TRILLION Reasons Why Everyone In Washington, Including The President, Should Be Heading To Prison

Πηγή: A Time of Choosing
By Gary P Jackson, July 22, 2011 · 4:06 pm

When I first learned of this, late Thursday, I was so angered I couldn’t even put it into words. Even now I’m really doing all I can to measure and moderate my tone. One thing about it, now we know why so many were adamantly opposed to auditing the Fed!

U.S. Senator Bernie Sanders [Socialist-VT] reports the first ever top-to-bottom audit of The Fed shows $16 TRILLION in secret “emergency” loans to American and foreign banks and other businesses. All sympathetic to the democrat party.
Last year, the gross domestic product of the entire U.S. economy was only $14.5 trillion!
These secret loans started during President George W Bush’s last year in office, December 2007, but it was all orchestrated by the Fed. In fact, many of the people who work for the Fed also have ties to the banks and corporations who got this money. Still, this doesn’t excuse the democrat controlled Congress, or the Bush administration.
Here’s what Senator Sanders posted on his website:

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.“
Among the investigation’s key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president,” Sanders said.
The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.
For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.
In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.
To Sanders, the conclusion is simple. “No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed’s board of directors or be employed by the Fed,” he said.
The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.
The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.
A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. “The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street.”
To read the GAO report, click here.

This is simply incredible. It’s crony capitalism at it’s worst, and the numbers are so large they are almost incomprehensible. We’re talking about more money than our yearly GDP, trillions more. It’s frightening enough to know our debt is equal to 100% of our GDP, and totally unsustainable, this puts us in a whole other world.
What’s more incredible is there have been numerous reports of bailout money going to foreign banks, a separate situation, and yet, Congress has done nothing.
Astute readers have heard of the Cloward-Piven Strategy. It was developed by a couple of radical, socialist Columbia University professors, Richard Andrew Cloward and Frances Fox Piven. both Cloward and Piven have been big players in the democrat party for decades, and have even been photographed at the White House with President Bill Clinton at official ceremonies.
Cloward-Piven is a strategy to overwhelm the system with debt, demand, and confusion, in order to cause the collapse the entire system of capitalism, and bring about a Marxist state. This is why you see the democrats wanting to add MORE debt, and spend MORE money, at a time we are beyond broke. It’s a deliberate, calculated strategy to destroy America as we know it, and bring about a command-and-control form of government …. Not that we aren’t almost there now!
In September of 2008 James Simpson wrote an great article: Barack Obama and the Strategy of Manufactured Crisis for the American Thinker. Simpson laid out the strategy Obama would use, as well as giving readers a nice history lesson of Cloward-Piven and the art of “manufactured crisis.” It’s a must read if you want to understand where we are at right now, and what is actually going on.
It’s a damned shame our “betters” in the GOP didn’t take time to learn about all of this BEFORE Obama was elected. Had the feckless Republican establishment learned what many of us already knew about Obama, maybe we wouldn’t be in this mess!
Besides the banks, you’ll notice General Electric is involved in all of this. GE’s CEO Jeffery Immelt is attached to Barack Obama at the hip. GE has received all sorts of special treatment, because Immelt has supported Obama so strongly, and is even on many regime advisory committees. He even turned the TV networks the company owns, most notably NBC and MSNBC, into propaganda channels for Obama and the DNC.
It’s crony capitalism. It reminds me of how socialist and communist states operate. The fat cats, as long as they support the regime, are allowed to not only make money, but actually raid the public coffers.
While these $16 TRILLION in secret loans are so over the top it’s almost hard top comprehend, they are no different to the Obama regime’s handouts to the labor unions, and other special interests who have the regime’s back. History tells us that it’s a good bet most of these loans will never be repaid.
It’s quite telling that at a time Obama is threatening to stop sending seniors and the disabled the monthly checks they have EARNED, as well as gutting the military, [while we are in three wars and terrorism is high] that he has plenty of party favors for his buddies.
The Fed is a bad situation all unto itself. That said, there is congressional oversight of the agency. That the agency has been allowed to run wild, while Congress did nothing, is criminal. Every single member of Congress charged with overseeing the agency must be fired. They also must be investigated. We should be filling our prisons with the corrupt bastards who allowed all of this to happen.
It’s quite obvious the Obama regime has purposely enriched it’s friends through all of this corruption.
We’ve never put a United States President in prison. Obama wants to be “historic” I say we need to make a little history. Obama, Fed chair Ben Bernanke, and an entire cast of characters have created a situation that will most certainly cause the Republic to collapse, if something radical isn’t done.
If the United States collapses, the entire world will collapse. Liberty and Freedom will be things we’ll read about in books. [if books aren't outlawed] We’ll all be living in a very dark time.
I have no faith in Congress. Even though Senator Sanders has exposed this massive corruption, you can bet this will be swept under the rug.
We, the people, must rise up and DEMAND satisfaction.
We must DEMAND that any member of Congress charged with keeping an eye on the Fed resign immediately, pending criminal investigation.
We must DEMAND Ben Bernanke resign immediately, pending criminal investigation.
We must DEMAND members of the Fed involved in this scheme resign immediately, pending criminal investigation.
We must DEMAND any bank officer, corporation management, absolutely anyone involved with any company that received these secret loans, and was involved in the process, should be investigated for criminal activity.
We must DEMAND the resignation of Barack Obama, and anyone else connected to this in his regime, pending criminal investigation.
We also MUST DEMAND a our next elected President have a record of successfully going after corruption, even in her own party. [I just happen to have someone in mind]
Never in the history of our nation has corruption been so rampant in government. We need a top to bottom overhaul. We MUST cut spending and get government out of our lives so we can grow jobs and create opportunities.
The only way we’ll even come close to surviving as a nation is to make the U.S. the most business friendly place on earth.
It’s going to take something radical. It’s going to take our government going back to First Principles, back to the Constitutional Republic our founders created. It’s going to take the federal government realizing what they can and cannot, and should not, interfere with. They need to realize most things, constitutionally, are left to the states to sort out and control.
We need new leadership. We need people who understand reality. We need people who understand they work for us, the people. That WE are their employers, their bosses.
We need people who are mindful of how hard it is to earn a living, and how precious those tax dollars that flow into D.C. are. We need people who will treat those dollars with respect, and spend them wisely.
We also need to send a message to the corrupt bastards in Washington now, by sending the guilty to prison [and throwing away the key] and the inept packing!
With all of the insanity we are seeing from Washington, we can no longer sit by and tolerate it. We must take action and we must be successful. The very existence of our Republic depends on us all standing up and being heard.