Saturday, December 13, 2008

The Federal Reserve "Madoff's" the taxpayer

Now Treasury and the Federal Reserve are engaging in the same behavior that Madoff will get time for. No disclosure.

Now that $2 trillion of taxpayer money has been lent out to insolvent institutions to keep them solvent, that we, as taxpayers will foot the bill, don't you think we can find out who is getting the money?

The Fed says no. Bloomberg did a request under the Freedom of Information Act, and the Fed said they are allowed to withhold this information. The only truth that the Fed said was that "loss in confidence in and between financial institutions can occur with lightning speed and devastating effects..." In other words..keep your money in the insolvent banks, and not the mattress or the system will "Madoff" you. Here's that story:

Dec. 12 (Bloomberg) -- The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.

Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.

The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.

“If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets.

The Fed stepped into a rescue role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program. The central bank loans don’t have the oversight safeguards that Congress imposed upon the TARP.

Total Fed lending exceeded $2 trillion for the first time Nov. 6. It rose by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA.

‘Been Bamboozled’

Congress is demanding more transparency from the Fed and Treasury on bailout, most recently during Dec. 10 hearings by the House Financial Services committee when Representative David Scott, a Georgia Democrat, said Americans had “been bamboozled.”

(been bamboozled? How about Ben bamboozled!)

Bloomberg News, a unit of New York-based Bloomberg LP, on May 21 asked the Fed to provide data on collateral posted from April 4 to May 20. The central bank said on June 19 that it needed until July 3 to search documents and determine whether it would make them public. Bloomberg didn’t receive a formal response that would let it file an appeal within the legal time limit.

On Oct. 25, Bloomberg filed another request, expanding the range of when the collateral was posted. It filed suit Nov. 7.

In response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” in which “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.

And let me just bring up one point, on the Fed's right hand bank, Goldman Sachs. "Leadman" Sachs was a recipient of $10 billion from the Tarp program, and now we see that Goldman cut it's bonus pool from $20 billion down to $12 billion. When Goldman reports, consider how they would of had to balance their losses if they didn't whack $8 billion of compensation from those overpaid hustlers that maneuver non performing assets into their Level 3 hierarchy and derivative desk.

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