Why Won't the Federal Reserve Say Who They Gave $2 Trillion To?

Posted by Ian Welsh, Firedoglake at 5:06 AM on November 11, 2008.

Apparently Bernanke, that wonderful bipartisan soul who is so competent and wonderful that everyone in the village thinks Obama should leave him in charge is refusing to identify who got almost 2 trillion dollars of Fed cash. Bloomberg News is suing to find out. Personally I really, really, really want to know. What exactly is Bernanke hiding? Who got the money he doesn't want us to know got the money?

This is money that was loaned in exchange for "collateral", by which we mean "trash no one else but the Fed would buy for anything but cents on the dollar." Barney Frank, embarrassing himself yet again, claims the Fed should keep its clap shut because if people know how bad it is, well, there might be a run. I think Barney's missing the point, as long as people don't know how bad it is, they won't trust anyone who might be borrowing large amounts of money from the Fed with crap collateral, because they don't know how bad it is and they suspect it's really really really bad. As in 10 cents on the dollar bad.

More to the point, that 2 trillion is taxpayer money, and taxpayers have a right to know what sweetheart deals Bernanke's been giving out, and who's been getting what. This whole "this information is too scary for citizens to know" schtick is so Bush regime. I thought we were moving into a new era of openness? Perhaps Barney should get with the program?

As for Bernanke, this is yet another reason why Bernanke, a central banker so incompetent he lost complete control of LIBOR, his most basic job, should lose his position. Sure, his mandate runs for another year, but if Obama asks him to step down, I can't imagine he wouldn't. The idea that a central bank that has screwed up as badly as the Fed has under both Greenspan and Bernanke is so much better off independent than with the public having some control is ridiculous and fundamentally anti-democratic. Central bank independence has just led to a huge financial bubble and economic collapse, while Bernanke and Greenspan both acted as if they were virtual dictators.

Bernanke needs to go, and either before or after he goes, the Fed needs to come clean about who it has given 2 trillion in loans to, and what the collateral is.

Tagged as: bernanke, financial crisis, fed reserve, two trillion dollars