If you missed it, I would suggest all those interested in politics and the economy should read the expose published by Bloomberg News on Sunday, which could be one of the biggest stories of the year.
A few highlights:
The true cost of all the loans and financial guarantees doled out by the Federal Reserve to banks across the globe during the financial crisis was an astounding $7.7 trillion. That’s right, $7.7 trillion, roughly equal to half of all U.S. economic output in a year. Or, more than 10 times the amount of the $700 billion TARP program that the public was told about.
Much of that financial lifeline consisted of nearly-interest-free loans that allowed the big banks to prop up their balance sheets, post huge profits and pay their executives hefty bonuses.
The inflated earnings the banks received thanks to Uncle Sam’s generosity – including a $1.2 trillion payout in a single day in 2008 – is estimated at $13 billion by Bloomberg.
The news agency’s full report will appear in the January edition of Bloomberg Markets Magazine, but the online version that was posted is already shaking up Washington. As it turns out, even Congress didn’t know what the Fed was up to.
Bloomberg deserves tremendous credit for waging a lengthy court fight against the Fed and the banks to get 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions.
Here’s a little taste of their story:
“The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
“The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008 — their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.
“…While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.”
You can read this entire amazing, infuriating story  here.