Have You Heard About The 16 Trillion Dollar Bailout The Federal Reserve Handed To The Too Big To Fail Banks?

What you are about to read should absolutely astound you.  During the last financial crisis, the Federal Reserve secretly conducted the biggest bailout in the history of the world, and the Fed fought in court for several years to keep it a secret.  Do you remember the TARP bailout?  The American people were absolutely outraged that the federal government spent 700 billion dollars bailing out the "too big to fail" banks.  Well, that bailout was pocket change compared to what the Federal Reserve did.  As you will see documented below, the Federal Reserve actually handed more than 16 trillion dollars in nearly interest-free money to the "too big to fail" banks between 2007 and 2010.  So have you heard about this on the nightly news?  Probably not.  Lately Bloomberg has been reporting on some of this, but even they are not giving people the whole picture.  The American people need to be told about this 16 trillion dollar bailout, because it is a perfect example of why the Federal Reserve needs to be shut down.  The Federal Reserve has been actively picking "winners" and "losers" in the financial system, and it turns out that the "friends" of the Fed always get bailed out and always end up among the "winners".  This is not how a free market system is supposed to work.

According to the limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the grand total of all the secret bailouts conducted by the Federal Reserve during the last financial crisis comes to a whopping $16.1 trillion.

That is an astonishing amount of money.

Keep in mind that the GDP of the United States for the entire year of 2010 was only 14.58 trillion dollars.

The total U.S. national debt is only a bit above 15 trillion dollars right now.

So 16 trillion dollars is an almost inconceivable amount of money.

But some other dollar figures have been thrown around lately regarding these secret Federal Reserve bailouts.  Let's take a look at them and see what they mean.

$1.2 Trillion

A recent Bloomberg article made the following statement....

The $1.2 trillion peak on Dec. 5, 2008 -- the combined outstanding balance under the seven programs tallied by Bloomberg -- was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.

The $1.2 trillion figure represents the peak outstanding balance on these loans, not the total amount of all the loans.  On December 5, 2008 the "too big to fail" banks owed this much money to the Federal Reserve.  Many of them could not pay these short-term loans back right away and had to keep rolling them over time after time.  Each time a short-term loan got rolled over that represented a new loan.

$7.7 Trillion

Bloomberg is reporting that the Federal Reserve had made a total of $7.77 trillion in financial commitments to the big banks by the end of March 2009....

Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

But as mentioned above, a one-time limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act covered an even broader time period and revealed even more bailout loans.

According to the GAO audit, $16.1 trillion in secret loans were made by the Federal Reserve between December 1, 2007 and July 21, 2010.  The following list of firms and the amount of money that they received was taken directly frompage 131 of the GAO audit report....

Citigroup - $2.513 trillion
Morgan Stanley - $2.041 trillion
Merrill Lynch - $1.949 trillion
Bank of America - $1.344 trillion
Barclays PLC - $868 billion
Bear Sterns - $853 billion
Goldman Sachs - $814 billion
Royal Bank of Scotland - $541 billion
JP Morgan Chase - $391 billion
Deutsche Bank - $354 billion
UBS - $287 billion
Credit Suisse - $262 billion
Lehman Brothers - $183 billion
Bank of Scotland - $181 billion
BNP Paribas - $175 billion
Wells Fargo - $159 billion
Dexia - $159 billion
Wachovia - $142 billion
Dresdner Bank - $135 billion
Societe Generale - $124 billion
"All Other Borrowers" - $2.639 trillion

This report was made available to all the members of Congress, but most of them have been totally silent about it.  One of the only members of Congress that has said something has been U.S. Senator Bernie Sanders.

The following is an excerpt from a statement about this audit that was takenfrom the official website of Senator Sanders....

"As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world"

So where is everyone else?

Why aren't leading Republicans and leading Democrats crying bloody murder over this report?

This scandal should have been front page news for months when it was revealed.

But it wasn't.

And Guess what?

Not only did the Federal Reserve give 16.1 trillion dollars in nearly interest-free loans to the "too big to fail" banks, the Fed also paid them over 600 million dollars to help run the emergency lending program.  According to the GAO, the Federal Reserve shelled out an astounding $659.4 million in "fees" to the very financial institutions which caused the financial crisis in the first place.

In addition, it turns out that trillions of dollars of this bailout money actually went overseas.  According to the GAO audit, approximately $3.08 trillion went to foreign banks in Europe and in Asia.

So why were our dollars being used to bail out foreign banks while tens of millions of American families were deeply suffering?

That is a very good question.

Also, it is important to remember that many of these bailout loans were made at below market interest rates, and this enabled many of these financial institutions to rake in huge profits.

According to a recent Bloomberg article, the big banks brought in an estimated $13 billion by taking advantage of the Fed’s below-market rates....

While the Fed’s last-resort lending programs generally charge above-market interest rates to deter routine borrowing, that practice sometimes flipped during the crisis. On Oct. 20, 2008, for example, the central bank agreed to make $113.3 billion of 28-day loans through its Term Auction Facility at a rate of 1.1 percent, according to a press release at the time.

The rate was less than a third of the 3.8 percent that banks were charging each other to make one-month loans on that day. Bank of America and Wachovia Corp. each got $15 billion of the 1.1 percent TAF loans, followed by Royal Bank of Scotland’s RBS Citizens NA unit with $10 billion, Fed data show.

So once the financial crisis was over, were adjustments made to the financial system to make sure that this type of thing would never happen again?

Of course not.

Today, the "too big to fail" banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

So now they are more "too big to fail" than ever.

But this is what happens when we allow unelected central bank bureaucrats to run our financial system.

Most Americans do not realize this, but the truth is that the Federal Reserve is not part of the government.  In fact, it is about as "federal" as Federal Express is.  The Federal Reserve has admitted that they are a privately owned institution in court many times, and you can see video of a Federal Reserve employee admitting that the Federal Reserve is privately owned right here.

The Federal Reserve is an out of control monster that is throwing around trillions of dollars whenever it wants to.  Nobody should be allowed to do this.  Nobody should be allowed to give bailouts to banks and corporations without the express permission of the U.S. Congress and the president of the United States.

This is a point that I made in my article yesterday.  The Federal Reserve decided this week that it is going to provide "liquidity support" to Europe.  If the American people do not like this move, that is just too bad.  We do not get a say in the matter.

Are you starting to understand why I keep pushing the idea that it is time toshut down the Federal Reserve?

Please share this information about the secret 16 trillion dollar Federal Reserve bailout with your family and your friends.

If we can get enough people to wake up, perhaps there is still time to change the direction that this country is headed.

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Shocking Charts And Statistics that Prove America Is No Longer A Wealthy Nation

Shocking Charts And Statistics That Prove That America Is No Longer A Wealthy Nation

 

by Michael

 How do you decide whether you are wealthy or not?  Do you determine that by how much money you spend at the stores?  Of course not.  You can tell if you are wealthy or not by comparing your assets (the money in your bank account, equity in your home, etc.) to your liabilities (your mortgage, credit card debt, student loan debt, etc.).  Well, a lot of Americans seem to believe that just because a lot of money is circulating in our economy that it must mean that we are a wealthy nation.  But that is simply not true.  To tell whether or not America is a wealthy nation, you need to look at the balance sheet numbers.  And when you look at the balance sheet numbers, a very sobering story emerges.  Over the past three decades, government debt, business debt and household debt have absolutely exploded, but our assets have not.  That means that we are getting poorer as a nation.  Hopefully the shocking charts and statistics in this article will help a lot of Americans to wake up.  Yes, we once were the wealthiest nation on earth, but today America is no longer a wealthy nation.
Household Wealth
We live during a time when U.S. households are becoming poorer.  This week the Federal Reserve announced that the total net worth of U.S. households declined by 4.1 percent  in the 3rd quarter of 2011 alone.
That is a staggering decline.  The total net worth of U.S. households plummeted by $2.2 trillion  during those three months.  When you break that down, it comes to approximately $7,800  for every single U.S. citizen.
But this is not the first time we have seen a huge decline in U.S. household wealth in recent years.
A recent article posted on CNN  detailed the stunning drop in U.S. household wealth that we saw from 2007 to 2009....

Household wealth plunged $16.3 trillion in the two years from early 2007 to the first quarter of 2009, and has slowly been climbing since then. But with the drop in the third quarter of this year, households find their net worth still $9.4 trillion, or 14%, below the high they hit in early 2007, before the bursting of the housing bubble.

So right now the total net worth of U.S. households is $9.4 trillion below what it was back in 2007.
That certainly is not good news.
But not only is the total net worth of U.S. households going down, our incomes are going down as well.
Since December 2007, median household income in the United States has declined by a total of 6.8%  once you account for inflation.
Not that incomes were rising very quickly prior to that time either.
Between 1979 and 2007, income growth for the bottom 90 percent of all U.S. income earners was only about 5 percent  for that entire time period.
Meanwhile, household debt was absolutely skyrocketing.  Take a look at the following chart which shows what total U.S. household debt has done over the last three decades....

 

So income growth has been pretty much flat over the past three decades but household debt has been rising at an exponential pace for most of that time.
Yes, there has been a little bit of deleveraging during this economic downturn, but there are now signs that the deleveraging is rapidly coming to an end.
According to a recent CNN article , credit card use in the United States is experiencing a major upswing once again....

Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data.

That is not good news.
The truth is that U.S. households owe way, way too much money already.  According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent .
We are up to our eyeballs in debt, and our incomes are not keeping up.
In addition, we have seen massive amounts of home equity wiped out in recent years.
An unusual thing has happened during this economic downturn.  For the first time in U.S. history, the banks have more equity in our homes than we do.  If you do not believe this, just check out this chart .
The truth is that the American people are not becoming wealthier.  They are becoming poorer.
And a shocking number of Americans are falling into poverty.  In 2010, 2.6 million more Americans fell into poverty , which set a new all-time record for a single year.
But this is not a new thing.  This is a trend that we have seen building for many years.  Back in the year 2000,11.3%  of all Americans were living in poverty.  Today, 15.1%  of all Americans are living in poverty.
So obviously U.S. households are not doing well.
But what about the government?
Government Debt
The U.S. national debt  is completely and totally out of control.  Right now it is sitting at $15,046,397,725,405.16.  That means that it is nearly 15 times higher than it was just 30 years ago.  Just check out this almost unbelievable chart....

 

So is our ability to pay these debts 15 times greater than it was back then?
Of course not.
Our liabilities are exploding at an out of control rate but our assets are not.
Whether you are a running a family or running a government, that is a recipe for financial disaster.
The U.S. government has been running budget deficits of over a trillion dollars for several years now, and there is no sign that these trillion dollar deficits are going to stop any time soon.
So how much money is a trillion dollars?
If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years  to spend one trillion dollars.
Yet somehow the U.S. government has accumulated a debt that is well over 15 trillion dollars.
The Bush administration was a nightmare when it came to running up debt, but they have definitely been outclassed by the Obama administration....
*During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office .
*The U.S. national debt has been increasing by an average of more than 4 billion dollars per day  since the beginning of the Obama administration.
*Since Barack Obama was sworn in, the share of the national debt per household has increased by $35,835 .
And most U.S. government spending does not do a thing to build real wealth for this country.  For example, the total compensation that the federal government workforce brought in during 2010 is estimated to be about 447 billion dollars .
So did federal workers create 447 billion dollars of real wealth last year?
Of course not.
The truth is that our bloated federal government is a massive drain on our society.
But the federal government is not the only one with a debt problem.
State and local governments all over America are also drowning in debt.  In fact, state and local government debt in America is now sitting at an all-time high of 22 percent  of U.S. GDP.
Total Debt
The following chart from the Federal Reserve combines government debt, business debt and consumer debt.  As you can see, America is swimming in an ocean of more than 50 trillion dollars of debt....

 

To get an idea of how bad that is, just look at where total debt was at back in 1970 or 1980.
Over the last three decades we have seen an orgy of debt that has been absolutely unprecedented.
Meanwhile, we are bleeding national wealth at a staggering rate.
Every single month, tens of billions of dollars more goes out of this country than comes into it.
In fact, it is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars .
This represents a transfer of wealth  that is so vast that it is almost impossible to believe.
Our dependence on foreign oil is greatly contributing to this.  It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars  from exporting oil this year.  Their biggest customer is the United States.
When we send hundreds of billions of dollars overseas, that is hundreds of billions of dollars that does not go into the pockets of American business owners or American workers.
The United States has had a negative trade balance every single year  since 1976, and since that time the United States has run a total trade deficit of more than 7.5 trillion dollars  with the rest of the world.
For a moment, imagine a giant map of the world.  Then imagine a pile of 7.5 trillion dollars sitting on the United States of America.
That looks pretty good, eh?
Well, then start taking big chunks of that money and start exchanging it for oil and for cheap plastic products until the entire pile is gone.
Are you starting to understand?
We burn up the foreign oil in our cars and most of the cheap plastic products end up being discarded fairly quickly.
But our loss of national wealth is permanent.
Meanwhile, we are facing national financial obligations in the years ahead that are absolutely nightmarish.
According to Boston University Professor Laurence J. Kotlikoff, the U.S. government is facing a "fiscal gap" of$211 trillion  in the decades ahead.  The following comes from an article that Kotlikoff wrote for CNN earlier this year....

The government's total indebtedness -- its fiscal gap -- now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations -- including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt -- and all projected future taxes.

If you went out and liquidated all of the assets owned by all American citizens, all U.S. businesses and all levels of government in America, it would only cover about a third of that bill.
Are you starting to get the picture?
America is no longer a wealthy nation.
We are like that family down the street that is always throwing around tons of money but that is always on the verge of bankruptcy.
So when they tell you that the economy "grew" by 1 or 2 percent, please don't think that means that America is becoming wealthier.
The truth is that our debts are growing at a far, far faster rate than our assets are.
That means that we are getting poorer.
Is there anyone out there that disagrees with that?

‘Banksters’ gone wild - A question for Malcolm Berko

‘Banksters’ gone wild

POSTED: Tuesday, December 6, 2011 at 03:26 PM PT
BY: Malcolm Berko

Malcolm Berko

Dear Mr. Berko: I’ve had it with Bank of America. Their customer service is terrible, and their greedy attempt to assess a $5 debit card fee is the final straw. I’d like to move my account to Ally Bank if you think it’s safe and if they have the proper insurance. What do you think? Or is there another bank you could recommend? – S.A., Vancouver, Wash.

Dear S.A.: According to a company spokesperson, the “banksters” at Bank of America listened to their customers and decided to cancel their $5 debit card fee. But I don’t believe that this bank listens to anybody, God included. What Bank of America’s management heard was tens of thousands of feet leaving its branch offices, and that scared the bejabbers out of them. But they will soon sneak in other small charges.

Ally Financial (formerly GMAC) became a bank holding company in December 2008 and officially changed its name to Ally in May 2009. And yes, it’s insured over and above the hilt. Ally is covered under the following: FDIC; PAL; SIPC; E&O; blanketed bond; employment practice and liability; bankers professional liability; privacy liability; CD; A/D; and EEOC. Whew. And if that weren’t enough, Ally may be the only bank that offers a free, $25,000 life insurance policy to depositors unfortunate enough to be killed by falling space junk.

Meanwhile, the U.S. Treasury owns 74 percent of Ally, a perk from its $20 billion bailout of GM. Yes, your money is safe at Ally, and it won’t stick you with a $5 debit card fee … yet.

Ally, the largest lender to U.S. auto buyers, will finance almost any new car purchase with practically no money down. In fact, my neighbor’s dog, Matzo Ball, bought a new Buick Enclave for $41,000 at 1.9 percent and financed it over seven years (although my neighbor had to co-sign the loan) through Ally.

And Ally isn’t easy only on its loans, but also on depositors. It doesn’t have debit card fees or ATM fees. It provides post-paid envelopes to mail your deposits. Its CD rates, while not the best, are far superior to Bank of America. You’ll get a decent rate on your checking account balances without monthly credit card, savings or checking account fees.

So you’ll save a few hundred bucks a year by moving your account to Ally – if you can get Bank of America to cooperate. Some big banks charge you a fee to move your account (most stock brokerages do) and in the process create a hassle so annoying that in your idle time, you may conjure up some very evil thoughts.

The plain truth is that while many banks don’t charge ATM, debit card and checking account fees, the end is near. In a few years, most banks will charge checking account fees; a fee for each check you write; a fee each time you use the Internet to pay a bill; a fee to accept deposits; a fee to mail statements; a fee to talk to a teller; a fee to open an account; a fee to post CD interest to your account; loan and credit card application fees; and fees if you don’t charge a minimum amount on your credit card each quarter. The list is endless. In the U.S., banks are not successful if they fail to increase their revenues, earnings and dividends every year.

The problem is that there are 8,000 banks in the U.S. (compared to fewer than 35 in Canada) with hundreds of thousands of branches. The scope is so gigantic that our banking system is too large to be profitable. There’s one bank location for every 1,000 U.S. citizens. In fact, just up the street from my office, I have to pass seven bank branches to get to the corner, where there are six banks.

This is an instance wherein competition becomes so counterproductive that banks must increase your costs to support hundreds of thousands of branches that occupy every curb, corner and cranny of most American neighborhoods.

Changing banks is no picnic. Many folks have direct deposit, Internet apps to pay bills, automatic payment deductions, credit cards, etc. And that makes switching banks a nightmare worse than getting audited by the IRS. They have you by the ring in your nose. While you’ll save a few hundred bucks for a few years by moving to Ally, the process may be more unpleasant than coping with Bank of America.

Address your financial questions to Malcolm Berko, c/o The Daily Journal of Commerce, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com.

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