Thursday, March 5, 2009

$1.9 Trillion and No Accountability

While we are fighting over couple of billions, the fed has loaned $1.9 TRILLION.  That's trillion with a capital T!

And we do not even know who that money went to and what they are buying. 

The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast “a stigma” on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral....

 In a time when we need transparency, the fed is try to be more secretive.


“I would assume that information would be shared by the Fed and the New York Fed,” said U.S. Representative Scott Garrett, a New Jersey Republican. “At some point, the demand for transparency is paramount to any demand that they have for secrecy.”

 I am surprised more people are not outraged at the amount and secrecy. 


On Oct. 25, Bloomberg filed another request, expanding the range of when the collateral was posted. It sued Nov. 7.

In response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” in which “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”

We are not going to have more confidence by the fed being secretive.  Of course, they know what they have lent out against (lower tranches of securities).  In which case, tax payers are going to be footing the bill.


Banks oppose any release of information because that might signal weakness and spur short-selling or a run by depositors, the Fed argued in its response.

“You could make everything a trade secret,” said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press.

 I guess you could be worried about bank run, but short-selling?  Citibank stock is already at the $1 level.  There is not much to gain by short-selling.

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