The "leaks" from the Federal Reserve should be more damaging than Julian Assange's latest offering, since the former actually tells us things we didn't already know.
Eric Fry, from The Daily Reckoning:
WikiLeaks is grabbing the headlines, but your California editor considers the “Icky-Leaks” issuing from the Federal Reserve to be much more intriguing – like the icky leak that the Fed doled out trillions of dollars in clandestine bailouts and guarantees during the crisis of 2008 and early 2009.
Thanks to a nifty little provision in the Dodd-Frank reform bill, the Fed was forced to come clean with these embarrassing details. On December 1, the Fed published an exhaustive and detailed list of bailout recipients, along with the sums each received.
“The document dump confirms,” The Nation reports, “that the $700 billion Treasury Department bank bailout…signed into law under President George W. Bush in 2008 was a small down payment on an secretive ‘backdoor bailout’ that saw the Fed provide roughly $3.3 trillion in liquidity and more than $9 trillion in short-term loans and other financial arrangements.”
Bernanke vehemently resisted making these disclosures…for obvious reasons. The disclosures reveal the Fed’s too-cozy relationship with Wall Street. They also reveal a kind of institutionalized arrogance: the Federal Reserve knows what’s best for us, even if we don’t know it ourselves…or believe it.
During the crisis, most Wall Street banks admitted to receiving a few billion dollars in TARP lending (after which they all made a big to-do about re-paying it). But they never uttered a peep about the billions of dollars they obtained secretly.
Goldman Sachs borrowed billions from the Fed’s Primary Dealer Credit Facility, but never bothered to mention this fact in any of its SEC filings. Goldman was equally silent about its borrowings from the Fed’s Term Securities Lending Facility. Only now – nearly two years later – do we learn what really happened.
“Morgan Stanley sold the Fed more than $205 billion in mortgage securities from January 2009 to July 2010,” The Huffington Post reports, “while it’s much bigger rival, Goldman Sachs, sold $159 billion. Citigroup, the nation’s third-largest bank by assets, sold the Fed nearly $185 billion in mortgage bonds. Merrill Lynch/Bank of America sold about $174 billion. It’s not clear how much these firms profited, but it’s abundantly clear that they did turn a profit.”
These obscenely large taxpayer-funded bailouts are not merely reprehensible for being conducted secretly; they are reprehensible for having deceived taxpayers, dollar-holders, investors and all other individuals who deserve honest and transparent financial markets.