The first top-to-bottom audit of the Federal Reserve
uncovered eye-popping new details about how the U.S. provided a whopping $16
trillion in secret loans to bail out American and foreign banks and businesses
during the worst economic crisis since the Great Depression. An amendment by
Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week
directed the Government
Accountability Office to conduct the study. "As a result of this
audit, we now know that the Federal Reserve provided more than $16 trillion in
total financial assistance to some of the largest financial institutions and
corporations in the United States and throughout the world," said Sanders.
"This is a clear case of socialism for the rich and rugged,
you're-on-your-own individualism for everyone else."
uncovered eye-popping new details about how the U.S. provided a whopping $16
trillion in secret loans to bail out American and foreign banks and businesses
during the worst economic crisis since the Great Depression. An amendment by
Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week
directed the Government
Accountability Office to conduct the study. "As a result of this
audit, we now know that the Federal Reserve provided more than $16 trillion in
total financial assistance to some of the largest financial institutions and
corporations in the United States and throughout the world," said Sanders.
"This is a clear case of socialism for the rich and rugged,
you're-on-your-own individualism for everyone else."
Among the investigation's key findings is that the Fed
unilaterally provided trillions of dollars in financial assistance to foreign
banks and corporations from South Korea to Scotland, according to the GAO
report. "No agency of the United States government should be allowed to
bailout a foreign bank or corporation without the direct approval of Congress
and the president," Sanders said.
unilaterally provided trillions of dollars in financial assistance to foreign
banks and corporations from South Korea to Scotland, according to the GAO
report. "No agency of the United States government should be allowed to
bailout a foreign bank or corporation without the direct approval of Congress
and the president," Sanders said.
The non-partisan, investigative arm of Congress also
determined that the Fed lacks a comprehensive system to deal with conflicts of
interest, despite the serious potential for abuse. In fact, according to the
report, the Fed provided conflict of interest waivers to employees and private
contractors so they could keep investments in the same financial institutions
and corporations that were given emergency loans.
determined that the Fed lacks a comprehensive system to deal with conflicts of
interest, despite the serious potential for abuse. In fact, according to the
report, the Fed provided conflict of interest waivers to employees and private
contractors so they could keep investments in the same financial institutions
and corporations that were given emergency loans.
For example, the CEO of JP Morgan Chase served on the New
York Fed's board of directors at the same time that his bank received more than
$390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase
served as one of the clearing banks for the Fed's emergency lending programs.
York Fed's board of directors at the same time that his bank received more than
$390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase
served as one of the clearing banks for the Fed's emergency lending programs.
In another disturbing finding, the GAO said that on Sept.
19, 2008, William Dudley, who is now the New York Fed president, was granted a
waiver to let him keep investments in AIG and General Electric at the same time
AIG and GE were given bailout funds. One reason the Fed did not make Dudley
sell his holdings, according to the audit, was that it might have created the
appearance of a conflict of interest.
19, 2008, William Dudley, who is now the New York Fed president, was granted a
waiver to let him keep investments in AIG and General Electric at the same time
AIG and GE were given bailout funds. One reason the Fed did not make Dudley
sell his holdings, according to the audit, was that it might have created the
appearance of a conflict of interest.
To Sanders, the conclusion is simple. "No one who works
for a firm receiving direct financial assistance from the Fed should be allowed
to sit on the Fed's board of directors or be employed by the Fed," he
said.
for a firm receiving direct financial assistance from the Fed should be allowed
to sit on the Fed's board of directors or be employed by the Fed," he
said.
The investigation also revealed that the Fed outsourced most
of its emergency lending programs to private contractors, many of which also
were recipients of extremely low-interest and then-secret loans.
of its emergency lending programs to private contractors, many of which also
were recipients of extremely low-interest and then-secret loans.
The Fed outsourced virtually all of the operations of their
emergency lending programs to private contractors like JP Morgan Chase, Morgan
Stanley, and Wells Fargo. The same firms also received trillions of dollars in
Fed loans at near-zero interest rates. Altogether some two-thirds of the
contracts that the Fed awarded to manage its emergency lending programs were
no-bid contracts. Morgan Stanley was given the largest no-bid contract worth
$108.4 million to help manage the Fed bailout of AIG.
emergency lending programs to private contractors like JP Morgan Chase, Morgan
Stanley, and Wells Fargo. The same firms also received trillions of dollars in
Fed loans at near-zero interest rates. Altogether some two-thirds of the
contracts that the Fed awarded to manage its emergency lending programs were
no-bid contracts. Morgan Stanley was given the largest no-bid contract worth
$108.4 million to help manage the Fed bailout of AIG.
A more detailed GAO investigation into potential conflicts
of interest at the Fed is due on Oct. 18, but Sanders said one thing already is
abundantly clear. "The Federal Reserve must be reformed to serve the needs
of working families, not just CEOs on Wall Street."
of interest at the Fed is due on Oct. 18, but Sanders said one thing already is
abundantly clear. "The Federal Reserve must be reformed to serve the needs
of working families, not just CEOs on Wall Street."
To read the GAO report, click here.
"U.S. provided a whopping $16 trillion in secret loans to bail out US and foreign banks"
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."
Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.
For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.
In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.
To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.
The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.
The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.
A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."
To read the GAO report, click here.
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Copyright © Bernie Sanders, sanders.senate.gov, 2011 |
