A Bloomberg report reveals that the U.S. government loaned banks $7.7 trillion in secret bailout funds at no interest and then borrowed the money back at interest. I think Jon Stewart really nails it in this segment.
“Unknown to the public and the Congress, these same banks had been borrowing massive amounts from the government to remain afloat. The total numbers are staggering: $7.7 trillion of credit—one-half of the GDP of the entire nation… This was perhaps the single most massive allocation of capital from public to private hands in our history, and nobody was told. This was not TARP: This was secret Fed lending,” (Slate).
The banks (J.P. Morgan, Bank of America, Citibank, Wells Fargo, Goldman Sachs, and Morgan Stanley to name a few) then invested this money in Treasury Bonds, making them an estimated $10 billion in profit.
What really grinds my gears: inspite of the government (and therefore the people of this country) bailing these banks out with taxpayer money, TARP (or as we now know the equalivant of 11 TARPS) banks continue to hold back on loans and continue to ruthlessly foreclose on people’s homes.
We’re in this mess because of the big banks and because of Wall Street. We helped them survive with taxpayer money. And yet, they have contributed nothing to actually improving the economy or even shown compassion.
Is this the fault of a fundementally broken system more than cold hearted bankers, yes that’s my guess. But, let’s stop pretending that it doesn’t need regulation and oversight.
What do you think, is this analysis on point or way off base?