The Federal Reserve committed nearly $8 trillion to save the nation’s financial system, according to a report by Bloomberg Markets Magazine that reveals previously unknown details of the staggering bailout.
More than 29,000 pages of Federal Reserve documents and central bank records of more than 21,000 transactions were obtained by Bloomberg under the Freedom of Information Act, after Bloomberg LP won a court case against the Fed and Clearing House Association, a group of the biggest American banks.
“The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day,” Bloomberg reports. “Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.”
By March 2009, the Fed had committed $7.77 trillion to rescuing the country’s financial system – “more than half the value of everything produced in the U.S. that year,” Bloomberg says.
And while Fed officials maintain that most of the loans have been repaid and losses were avoided, “details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger,” according to the report.
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