Federal Reserve Refuses To Identify $2 Trillion in Loans

[Truthed]

Nov. 10 (Bloomberg) -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the ban More..king system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

``The collateral is not being adequately disclosed, and that's a big problem,'' said Dan Fuss, vice chairman of Boston- based Loomis Sayles & Co., where he co-manages $17 billion in bonds. ``In a liquid market, this wouldn't matter, but we're not. The market is very nervous and very thin.''

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.

``It's your money; it's not the Fed's money,'' said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. ``Of course there should be transparency.''

Federal Reserve spokeswoman Michelle Smith declined to comment on the loans or the Bloomberg lawsuit. Treasury spokeswoman Michele Davis didn't respond to a phone call and an e-mail seeking comment.

The Fed's lending is significant because the central bank has stepped into a rescue role that was also the purpose of the $700 billion Troubled Asset Relief Program, or TARP, bailout plan -- without safeguards put into the TARP legislation by Congress.

Total Fed lending topped $2 trillion for the first time last week and has risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds.

Before Sept. 14, the Fed accepted mostly top-rated government and asset-backed securities as collateral. After that date, the central bank widened standards to accept other kinds of securities, some with lower ratings. The Fed collects interest on all its loans.

The plan to purchase distressed securities through TARP called for buying at the ``lowest price that the secretary (of the Treasury) determines to be consistent with the purposes of this Act,'' according to the Emergency Economic Stabilization Act of 2008, the law that covers TARP.

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[Mingus]

I like this. There seems to be accountability being put in place, and it seems obvious that the Fed is gonna get slammed for what it might have to disclose. What other reason is there for hiding who is receiving the money from the bailout if it is a series of lawful transactions?

[kidflash2008]

This is one of the reasons the country is in such a mess. Everyone is in it for themselves, and the Administration in power right now is going to take what it can before Jan 20 arrives. This should not really surprise anyone should it?

[guruoak]

Well, If you think that it is just the current admin I think looking further in to who actually runs our govt. The some of the top five campaign contributors to both campaigns where, Goldman Sachs, Citi Group, and J.P Morgan & Chase. The banks control the stock market which is manipulated by the bankers and profiteers of this war time economy, Look and see who used to be the the Chairman and Chief Executive Officer of Goldman Sachs. I think it was Henry Paulson according to Wikipedia. So Obama/McCain it is all the same. The only way we will see "Change" is if "WE" The American people become the "Change" Namaste