Home > financial crisis > Bailing out the financial aristocracy

Bailing out the financial aristocracy

from David Ruccio

We’ve known all along about the TARP funds.* Now, thanks to Bloomberg, we know about the $1.2 trillion of public money, which is about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages, Fed Chairman Ben S. Bernanke showered on the Wall Street aristocracy. 

The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress. . .

It wasn’t just American finance. Almost half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland Plc, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS AG (UBSN), which got $77.2 billion. Germany’s Hypo Real Estate Holding AG borrowed $28.7 billion, an average of $21 million for each of its 1,366 employees.

There’s no doubt about the fact Bernanke was worried that, without TARP and the emergency loans, the whole system would come tumbling down. But, of course, they acted to save the banks and not the millions of homeowners who were—and remain—underwater or the millions of workers who were—and remain–unemployed.

To paraphrase that old German philosopher, the monetary authority of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.

* But we don’t know what the banks did with the funds, since there were no strings attached.

  1. Alice
    August 26, 2011 at 10:55 am

    “To paraphrase that old German philosopher, the monetary authority of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.”

    You bet it is. Imagine if he had showered that money into infrastructure projects or on ordinary citizens (same thing).. and let the banks fold. I bet the economy would have been on the road to recovery ..,.but Bernanke acted to protect the status quo of what isnt working…the United States of Inequality.

    • Garrett Connelly
      August 28, 2011 at 5:45 pm

      Alice, your analysis is probably correct. We seem to agree that a sustainable human culture will require justice, equity and dignity, and we probably agree that the old government form is not going to democratize the economy. I have my ideas about the way toward real democracy, what do you suggest as a good first step ?


      • Alice
        August 28, 2011 at 10:37 pm

        Garret – My suggestion is that the US congress actually start listening more to Warren Buffet and less to Ben Bernanke and the old boys from Goldman Sachs as a good first step. The rivers of gold flowing into and protecting the financial services sector also needs to be stopped and redirected back to labour to save how they want to, not how their investment advisor or super fund tells them to in those countries where super is mandatory (ie get rid of it and the sooner the better). Let the government offer bonds to ordinary everyday people who dont want to touch the madness of share markets because they have been fleeced once too often.

        Two pretty big steps, I agree.We need to deflate, not the economy, but the spin dollar value from shares that is caused by an overprotected financial sector (slightly hypocritical when the sermon for the past twenty has been no protection for any other “real” sectors).

  2. Susana Martín Belmonte
    August 30, 2011 at 2:47 pm

    We’re talking about Trillions, not billions. The Audit revealed secret bailouts for $16 Trillions (See: http://www.other-news.info/index.php?p=4020).

    The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows..

    Citigroup: $2.5 trillion ($2,500,000,000,000)
    Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
    Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
    Bank of America: $1.344 trillion ($1,344,000,000,000)
    Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
    Bear Sterns: $853 billion ($853,000,000,000)
    Goldman Sachs: $814 billion ($814,000,000,000)
    Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
    JP Morgan Chase: $391 billion ($391,000,000,000)
    Deutsche Bank (Germany): $354 billion ($354,000,000,000)
    UBS (Switzerland): $287 billion ($287,000,000,000)
    Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
    Lehman Brothers: $183 billion ($183,000,000,000)
    Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
    BNP Paribas (France): $175 billion ($175,000,000,000)
    and many many more including banks in Belgium of all places

    View the 266-page GAO audit of the Federal Reserve(July 21st, 2011): http://www.scribd.com/doc/60553686/GAO-Fed-Investigation

    Source: http://www.gao.gov/products/GAO-11-696
    FULL PDF on GAO server: http://www.gao.gov/new.items/d11696.pdf
    Senator Sander’s Article: http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

    • Alice
      August 31, 2011 at 10:26 am

      Suzanne – your post makes me feel quite ill. Its just do damning of whats wrong with the managemnt of multiple economies (multiple, unfortunately, now). A system of economic management in outright decay.

  3. paul
    August 30, 2011 at 4:47 pm

    No matter which way we slice our current economics is archaic, and our economists don’t
    know what the heck they are doing. We need a whole new paradigm !!!!

  4. Alice
    August 31, 2011 at 9:30 am

    So manufacturing and exports and real job creation in the US has been sacrificed to bail out the freedom of financial markets (read big fat banks) to where they like, pump up share prices and then dump and strip the companies, and sack the real jobs.

    And the US says protection is dead…yeah right. But they dont mind protecting the biggest gambling industry of all. The rest of the bastards that do…or …did real work ..well just tough luck. Eat your food stamps in the name of “structural ajustment.”

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