Banks Play Shell Game with Taxpayer Dollars

[kpete]

Published on Tuesday, April 26, 2011 by CommonDreams.org
Analysis: Banks Play Shell Game with Taxpayer Dollars
Statement by Senator Bernie Sanders
BURLINGTON, VT - A study requested by Sen. Bernie Sanders (I-Vt.) found numerous instances during the financial crisis of 2008 and 2009 when banks took near zero-interest funds from the Federal Reserve and then loaned money back to the federal government on sweetheart terms for the banks.

The banks pocketed interest on government securities that paid rates up to 12 times greater than the Fed’s rock bottom interest charges, according to a Congressional Research Service analysis conducted for Sanders. http://sanders.senate.gov/imo/media/doc/sanders-bankholdingsofsecurities.pdf

“This report confirms that ultra-low interest loans provided by the Federal Reserve during the financial crisis turned out to be direct corporate welfare to big banks,” Sanders said. “Instead of using the Fed loans to reinvest in the economy, some of the largest financial institutions in this country appear to have lent this money back to the federal government at a higher rate of interest by purchasing U.S. government securities.”

The Federal Reserve claimed at the time that the emergency loans were needed so banks could provide credit to small- and medium-sized businesses that desperately needed money to create jobs or to prevent layoffs. “Instead of using this money to reinvest in the productive economy, however, it appears that JPMorgan Chase, Citigroup, and Bank of America used a large portion of these near-zero-interest loans to buy U.S. government securities and earn a higher interest rate at the same time, providing free money to some of the largest financial institutions in this country,” Sanders said

MORE: http://www.commondreams.org/headline/2011/04/26-4

[Octafish]

1. Free Profit.

When do We the People get ours? Or is this government service available only to the rich and connected?

[leveymg]

2. Banks like socialism and state support for incomes, when it's for them.

[xchrom]

3. recommend

[DCKit]

4. The rest they invested in commodities speculation and bonuses.

They're raking it in on oil, precious metals and food right now.

[Poboy]

5. R'd

[kenny blankenship]

6. There's where your "recovery" went to.

The crooks who sunk your economy were not just bailed out and allowed to stay in charge, they were gifted with free profits. Courtesy of your Federal Reserve central bank and government. And of course YOU are the ones who actually pay for it, in higher prices for gas, food, etc.

[Capitalocracy]

7. Tell me if what I'm about to say is crazy.

Could S&P's threatening to downgrade the U.S.'s rating be a maneuver to increase government bond interest to further inflate this backdoor bailout?

[Occulus]

8. I wonder what would happen if everyone who owes money TO these banks just stopped paying?

All us ordinary citizens flatly refusing to pay them would kind of hamper their operations, wouldn't you think?