One story that didn’t seem to make any of the mainstream news is the results of the recent audit of the Federal Reserve. This is a huge story and it has been either buried or ignored, depending on how you perceive it. As it turns out, the Federal Reserve lent out over $16 trillion during the financial crisis in 2008 and then refused to provide any information to the public. Thankfully, the Dodd-Frank law required an audit of the Fed and the results were nothing short of unbelievable. This was the biggest and boldest swindle ever devised.
I want to send a special shout-out to my Mom for forwarding this story. If it wasn’t for her, I may have completely missed it. I read the financial news and dozens of financial blogs every week. Nobody is talking about the results of this audit.
Treasury Bail-Out Scam
Millions of Americans were appalled at the way bail-out of the financial sector was crammed down our throats. But, I don’t think anyone realized how much money was involved in this scam. Everyone was told the bail-out would cost around $800 billion. And, we were told most of the money was quickly repaid. Both of these statements were complete fabrications.
The bail-out was sold to the public as being critical for people on Main Street. But, it’s obvious that it mostly benefited people on Wall Street. Banks and other recipients simply pocketed the money and no relief trickled down to taxpayers. There was very little permanent hiring from all of the squandered stimulus. And, banks stifled the loan modifications they promised to Congress. US corporations are sitting on mountains of cash, much of it coming from our treasury, and they have no intention of hiring any new employees.
One surprising finding of the audit was over $3 trillion in assistance was used to bail out foreign banks and corporations. Most Americans, including myself, had no idea how much of this money went offshore. Countries from Scotland to South Korea received hundreds of millions of dollars in financial assistance. And, there is no clear indication how much of this money is still outstanding. I’m positive this wouldn’t happen with approval from voters. And, I’m positive Congress and the President wouldn’t have voted for it while the details were being made public.
Conflicts of Interest
I don’t think anyone would be shocked to learn there were huge conflicts of interest that occurred during the bail-out. In fact, the Federal Reserve itself is one big conflict of interest, because it puts private bankers in a position of authority over what should be government entities regulating the economy and treasury funds.
Here are some of the shocking findings from the report:
- The Fed provided conflict of interest waivers for employees and contractors, so they could keep their investments in banks and corporations that were given emergency loans.
- 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.
- 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.
- 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.
- Two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts.
The Bottom Line
The bottom line is that the Federal Reserve cannot be allowed to operate in secrecy to plunder our treasury. The Federal Reserve System needs to operate in full view of the public and to be held accountable with the same checks and balances as required in our Constitution.
“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.”
Bernie Sanders – Senator (I) Vermont
This post was featured on the Carnival of Personal Finance over at Financial Uproar. If you aren’t familiar with the Carnival of Personal Finance, you need to check it out. It’s the greatest carnival on the net.