

Secret Fed Loans Gave Banks Undisclosed $13B - uptown
http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html

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tzs
This was thoroughly refuted last week on Reddit. See
[http://www.reddit.com/r/politics/comments/mdh33/audit_of_the...](http://www.reddit.com/r/politics/comments/mdh33/audit_of_the_federal_reserve_reveals_16_trillion/c3025jl)

TL;DR: basically it is mostly short term paper, and each "loan" is being
counted multiple times to get the high number. For instance, suppose I loan
you $1, to be repaid tomorrow. Tomorrow you say "OK, I'm ready to pay you
back!", and I say "Go ahead and keep it another day!". We do this 200 times.
By the logic of the article, I've loaned you $200, even though I only had $1
in play at any given time.

~~~
tptacek
Surprising and a little bit dispiriting. Adding econ to crypto in my list of
topics Reddit now demonstrably handles better than HN.

Sometimes there's a benefit to being a smaller community, but here's an
instance where there's a benefit to Reddit being bigger; it's less likely to
get held captive by agreeable narratives.

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pcvarmint
More like $16 trillion: [http://www.rawstory.com/rs/2011/07/21/audit-fed-
gave-16-tril...](http://www.rawstory.com/rs/2011/07/21/audit-fed-
gave-16-trillion-in-emergency-loans/)

So this story isn't exactly news.

Here is a good timelime of the economic crisis, all the way back to WWII:

[http://www.jamesaltucher.com/2011/11/pearl-harbor-caused-
the...](http://www.jamesaltucher.com/2011/11/pearl-harbor-caused-the-
financial-crisis-of-2008/)

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1010011010
The banking cartel* gave itself more than half of the annual output of the
world's largest economy. Bankers got and continue to get huge bonuses.
Everyone else? Not so much. Heckuva job, guys.

As the article asks, “Banks don’t give lines of credit to corporations for
free. Why should all these government guarantees and liquidity facilities be
for free?”

The banks are simply too big as well. "Too big to fail" should mean "too big
to exist". The process should be: get a bailout, get broken up.

*"A cartel is a formal (explicit) agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production."

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dantheman
The process should be, you fail - you fail, no bailouts.

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1010011010
That would be even better. And if the units are small enough, it'll work.
"Bailout then breakup" is a proposed mechanism for making those units small
enough.

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dantheman
There was no reason to bailout AIG, it merely was a way to pump cash into
these banks. They should have been forced into bankruptcy and their assets
sold of to more responsible banks.

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nextparadigms
The title is inaccurate. They gave them _$7.7 trillion_ dollars. It's the
profit that was $13 billion on that loan, from what I can tell.

~~~
tptacek
They loaned that much money; they didn't "give" it. They've since been repaid.

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stevedekorte
$16T according to the Federal Reserve audit
[http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4b...](http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3)

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tmedbury
How is this remotely legal?

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yaix
There are so many illegal things the US gov't has done in the past 10 years,
one more doen't really matter. At least this time it didn't involve killing
people.

