We’ve been scammed: Federal Reserve secretly administered $7+ trillion bailout to benefit bankers

Opposites in many ways, the Tea Party movement and Occupy Wall Street have this in common: Both have channeled the public’s not always well-informed anger over the behavior of banks and government during the financial crisis. As it turns out, they didn’t know the half of it, and neither did the rest of us, including Congress.

As a story in the January issue of Bloomberg Markets magazine shows, between August 2007 and April 2010, the Federal Reserve secretly administered the largest bailout in U.S. history without approval or oversight from the legislative branch. To give a sense of the scale of this effort, as of March 2009, the Fed had committed $7.77 trillion, more than half the value of everything produced in the U.S. that year, to the rescue.

Even as they were tapping the Fed for emergency loans at rates as low as 0.01 percent, the banks that were the biggest beneficiaries of the program were assuring investors that their firms were healthy. Moreover, these banks used money they had received in the bailout to lobby Congress against reforms aimed at preventing the next collapse.

By keeping the details of its activities under wraps, the Fed deprived lawmakers of the essential information they needed to draft those rules. The Dodd-Frank Wall Street Reform and Consumer Protection Act, for example, was debated and passed by Congress in 2010 without a full understanding of how deeply the banks had depended on the Fed for survival. Similarly, lawmakers approved the Treasury Department’s $700 billion Troubled Asset Relief Program to rescue the banks without knowing the details of the far larger bailout being run by the Fed.

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Read more at Bloomberg.com HERE.