October 25, 2011
Fox Business notes:
The conflicts of interest and policy controversies in the Federal Reserve’s bailout of the financial system now include helping out millionaires, billionaires, foreign automakers, and companies whose executives sit on the board of directors of the U.S. central bank.
The Federal Reserve also bought more than $2.2 billion in commercial paper from the state-owned central bank of Bavaria, and it gave more than $23 billion in loans to the Arab Banking Corp. based in Bahrain, with an interest rate as low as a quarter of a percentage point. The Federal Reserve also lent more than $9.6 billion to the Central Bank of Mexico.
Banks worldwide tapped into the Federal Reserve’s emergency lending programs more than 4,200 times for a total of $3.8 trillion, estimates show.
Senator Sanders’ staff found that “several billionaires and tens of multi-millionaires received cheap loans from the Fed to invest in securities backed by auto, mortgage, credit card, student and mortgage loans,” Sanders’ letter says. That Fed program is called the Term Asset-backed Securities Loan Facility.
The rich include Christy Mack, the wife of Morgan Stanley’s John Mack, billionaire businessman H. Wayne Huizenga; and Michael Dell, co-founder of Dell Computer, hedge fund manager John Paulson and private equity honcho J. Christopher Flowers.
[Senator Sanders] also says that it appears the Fed provided loans to over 100 separate hedge funds, offshore funds, and other investment funds located in the Cayman Islands and other tax havens via the TALF program alone.
Sanders also wants to know why the Federal Reserve bailed out the Korea Development Bank, the state-owned bank of South Korea, by purchasing more than $2.2 billion of its commercial paper, and why it also extended more than $40 billion to the central bank in South Korea.
I’ve previously noted that the Fed bailed out the Central Bank of Libya under Gaddafi.
Indeed, Ron Paul – the current chair of the monetary policy subcommittee – says that one-third of Fed bailout loans – and essentially 100% of NY Fed loans – went to foreign banks.
The American people didn’t get to vote on these huge bailouts and low-cost loans to foreign banks.
Congress didn’t get to vote on them … they didn’t even know about them.
Independent economists didn’t have a chance to weigh in on whether shipping American dollars abroad is good for the U.S.
Indeed, it seems as if the Fed has chosen to help everyone but the average American … choosing the big banks and financiers – abroad or in the U.S. – again and again at the expense of the little guy. (The Fed is even intentionally curbing lending by the banks to Main Street.)
No wonder high-level economists have said that the Fed caused both the Great Depression and the current economic crisis.
No wonder economists say that the Federal Reserve should be ended – or its powers be dramatically curtailed.
This article was posted: Tuesday, October 25, 2011 at 2:40 am