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I guess this is a big CRS news day! Huffington Post reported on 4/26 that a newly released Congressional Research Service (CRS) Report requested by Senator Bernie Sanders (I-VT) found that the nation’s largest banks profited off the federal government’s bailout programs by borrowing cash for next to nothing, then lending it back to the federal government at substantially higher rates. The report has been posted at Sanders’ Web site (PDF).
A newly-released study from the Congressional Research Service bolsters claims that the nation’s largest banks profited off the Federal Reserve’s financial crisis-era programs by borrowing cash for next to nothing, then lending it back to the federal government at substantially higher rates.
The report reinforces long-held beliefs that the banking system in essence engaged in taxpayer-financed arbitrage: They got money for free, then lent it back to Uncle Sam while collecting juicy returns. Left out of the equation are the millions of everyday borrowers, like households and small businesses, who were unable to secure loans needed to tide them over until the crisis ended.
The Fed released records under pressure in December and March that showed the extent of its largesse. The CRS study shows for the first time how some of the most sophisticated financial firms could have taken the Fed’s money and flipped easy profits simply by lending it back to another arm of the government.
The Columbia Journalism Review “Audit” section (which reports on the business press) has created a guide to information about big federal spending programs. It has lots of links and explanations of what you can find. This is a great starting point for tracking down information on the Bailout and Stimulus.
- BAILOUT! STIMULUS!—YOUR ESSENTIAL GUIDE, Columbia Journalism Review, “The Audit.”
In a specially commissioned study, The Audit here takes a look at online resources tracking the bailout and stimulus money, from government web sites to independently run operations. It’s not comprehensive, but it’s pretty good.
As noted here before, the Federal Reserve has been reluctant to release documents about bailout money.
Now according to POGO, “Governmentattic.org has posted several documents from the Federal Reserve in response to a FOIA request about the Fed’s lending activities related to the credit crisis” but “the Fed was withholding over 2,000 pages of information under the (b)(4) and (b)(5) FOIA exemptions, which protect against the disclosure of “trade secrets” and “inter-agency or intra-agency memorandums or letters.””
The Fed Knows Best, Project on Government Oversight, Feb 23, 2009.
Here is another non-government site about the economic bailout/recovery. This one is put together by investigative journalists. They are citing the stories they have done on the largest domestic spending bill in U.S. history and highlighting the best reporting from around the Web on the stimulus.
ShovelWatch is a joint project of the non-profit investigative outfit ProPublica, the morning news program The Takeaway and WNYC, New York’s flagship public radio station.
With investigative reporting, interactive features, and (not least) help from you, we’ll be tracking the stimulus bill dollars as they travel from Congress to your neighborhood. With your help, we’ll make sure that one of the biggest, fastest appropriations ever has a big, fast army to track whether it is well spent.
Both Democratic and Republican Senate leaders have indicated that they will approve the release of the remaining $350 million of the Treasury’s bailout fund. As there are concerns that banks were hoarding the aid money instead of giving it to consumers and businesses, regulators have requested that banks give information on the amount that has been loaned earlier. Yesterday, President Bush asked Congress to release the remaining money as Obama has been pushing for it. On Thursday, the Senate will vote on it. More details about this matter are available in the New York Times article.