Were the bankers and Federal Reserve trying to hide something in particular? Or were they just fighting Bloomberg’s lawsuit to reveal the details of the Fed’s sweetheart bailout loans out of habitual arrogance?
I’ve been wondering about this as I make my way through Bloomberg’s expose based on the data the news service forced the Fed to turn over after several years of litigation.
The Fed and the banks tried to scare the courts into keeping the data secret, warning that disclosure would stigmatize those who received the low interest loans and cause them irreparable harm.
Finally, the courts saw through all the Fed’s and the bank’s bogus arguments and ordered the data made public.
The numbers are all so mind-bogglingly huge that it’s easy to be overwhelmed, for the information to lose it’s meaning. But as Columbia Journalism Review’s The Audit pointed out, Bloomberg went straight to the heart of the issue, reminding us what kind of a bailout our politicians delivered, in which banks and other corporations got access to $1.2 trillion in low-interest loans – about the same amount U.S. homeowners are struggling with on 6.5 million delinquent or foreclosed mortgages.
But as RJ Eskow reminds us, we knew a lot of the grisly details before the latest data dump – like that the 10 largest banks got $667 billion in low-interest loans from the Fed.
What we didn’t know until now is how much of that money was an outright gift from taxpayers; Eskow estimates that it amounts to about $27 million on each $1 billion worth of loan, based on the difference between the usual 3.8 percent interest rate and the 1.1 sweetheart rate the Fed charged as part of its bailout. Because the Fed attached no strings to its generosity to the banks, the bankers never paid it forward to the rest of us, who saw our access to credit shrink. And it never occurred to the Fed that it might have stimulated the economy with a few well-placed low-interest loans to the rest of us.
The bottom line is that the Fed shouldn’t be handing out trillions of dollars without any accountability or transparency. Most Americans are not going to have wade through the details to confirm their gut feeling – we’re getting screwed.