Secret Loans by the Fed helped banks profit $13 Billion...

occupy_wall_streetWhile it is easy for the vast majority of we, America’s 99%, to look upon our slightly retarded, more vocal “brothers” in the Occupy Wall Street Movement as nothing more than lazy hippie’s desperate to hold on fast and tight to a dream of being held up by the rest of us citizens, upon hearing things like this I totally understand where it is the outrage is coming from…

It turns out that perhaps the banks that were “too big to fail” during the Dec. 5th 2008 financial collapse might have ended up faring better than they were letting on …

A report- released in the January 2012 edition if the Bloomberg Market magazine- is claiming that because of the below market value loans being made to by the Federal Reserve to the so called “troubled banks” during the 2008 crash made a combined $13 billion in income.

And that’s not the worst of it…

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The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open. Had it not been for that, the Federal Reserve would have keep it all on what the kid’s call the “D-L” because (as the Fed argued) revealing borrower details would create a stigma causing investors and counterparties to shun firms that used the central bank as lender of last resort and that needy institutions would be reluctant to borrow in the next crisis.

The Fed has been lending money to banks through its so- called discount window since just after its founding in 1913. Starting in August 2007, when confidence in banks began to wane, it created a variety of ways to bolster the financial system with cash or easily traded securities. By the end of 2008, the central bank had established or expanded 11 lending facilities catering to banks, securities firms and corporations that couldn’t get short-term loans from their usual sources.

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“Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs. “Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses.”

The Fed has said that all loans were backed by appropriate collateral and that all the loans were eventually paid back in full. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland.

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