Secret Loans Topped $7 Trillion, Helped Rich Get Richer

In addition to Bush's  $700 billion TARP in the Fall of 2008, Bloomberg is reporting today that the Federal Reserve dolled out an additional $7.7 trillion of secret loans to Wall St. bankers. The banks claim they turned a $13 billion profit from the secret loans, repaid all the money and that no money was lost.

The Federal Reserve admitted the loans were done in secret to prevent a stigma from destroying an already fragile financial system.  "The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma -- investors and counterparties would 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."

Bernanke is certainly right about that.  It would have delegitimized the banks to a point people would have been marching in the streets demanding that they too get a return on their tax dollars.  Oh wait....it's happening anyway.

But here's the point to this story...

The private sector, if you can call it that, received a $700 billion bailout bill plus $7.7 trillion in secret loans to keep it from collapsing.  It was argued, the banks were too big to fail.  Meaning the result of their failure would be much worse for the country than the stigma of being bailed out.  So we kept them from failing by apparently doing everything we could, including all kinds of top secret stuff and spent a ton of money doing it.  It worked.  The economy came back from the brink.  But now the banks, thanks to tax payer money, are making record profits and unemployment is still above 9%.

Wall St. fat cats, bank CEO's, all kinds of corporate bosses are getting richer at record pace with amounts much larger than they were before the crisis.  "The nation’s largest banks have turned more in profit in the last 30 months than they did in nearly eight years preceding the crisis, all while spending millions to derail significant reform legislation."

That, my friends, is the exact definition of redistribution of wealth.  Hard earned tax payer money was redistributed to a failed financial system causing the system to bounce back, grow even larger than they were when they were said to be "too big to fail," and successfully helped the richest people in America get even richer.