Remember the $4.8 trillion dollars in bailout monies to Big Banks in 2008 under the Bush TARP plan for which 31% is still outstanding. We now learn that in addition the Federal Reserve loaned those banks an additional trillion. According to a new report from Bloomberg News:
The U.S. Federal Reserve mounted an unprecedented campaign to head off a depression by providing as much as $1.2 trillion in public money to banks and other companies from August 2007 through April 2010, exceeding the $700 billion Troubled Asset Relief Program.
We have recently been discussing federal budgets. Think about this:
The $1.2 trillion peak on Dec. 5, 2008 — the combined outstanding balance under the seven programs tallied by Bloomberg — was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.
One aspect of the bailout sure to exasperate critics of the Federal Reserve is that almost half of the Fed’s top 30 borrowers were European firms.
The $1.2 trillion figure is the compilation of the balance for seven programs instituted by the Fed. To put that amount in perspective:
The $1.2 trillion — which Federal Reserve Chairman Ben Bernanke lent to banks and other firms to prevent the economy from collapsing is roughly equivalent to the amount that U.S. homeowners currently owe on 6.5 million underwater mortgages, Bloomberg said.
These numbers are even big to Wall St. dwellers:
“These are all whopping numbers,” said Robert Litan, a former Justice Department official who in the 1990s served on a commission probing the causes of the savings and loan crisis. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.”
I am still waiting for the politicians and legislators that supported TARP like President Obama and Congressman Mike Rogers to own this and its continuing consequences.