The Federal Reserve: A Common Enemy

I originally wrote this piece for RevoluTimes on December 3, 2011

The recent discovery that prior to the TARP bailouts of 2008 (which authorized $700 billion in purchased assets), the Federal Reserve secretly doled out $7.7 trillion to foreign banks has caught the attention of pundits across the political spectrum. And it should. The TARP program originally authorized what was thought to be an unprecedented but allegedly necessary purchase of “troubled assets” by the Department of the Treasury in an attempt to save the participating institutions from further losses by improving the liquidity of these assets. Most of the American people haven’t been convinced such measures were truly necessary. In response to the bailouts emerged the Tea Party; a band of conservatives, libertarians, disenchanted liberals and independents who believe the size of government has grown too large and its influence (particularly in the economy), should be greatly limited. Not satisfied with these sentiments and desperate for a reenergized base, many left-liberals have joined ranks with the growing Occupy Wall Street demonstrations (OWS), that feels the power and influence of corporations has corrupted the government and sold the people to elite bankers. While it’s true there are stark differences between the dominant philosophies of these two movements, to a degree they’re saying the same thing in different languages. The latest reports from Bloomberg News suggest the Federal Reserve may be the missing link between the two populist movements.

Reported Bloomberg:

“A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. 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.”

The report continues to note that not only did the Federal Reserve secretly print this money, but they gave the loans at below market interest rates. How low exactly? 0.01%! As the always hilarious Jon Stewart opined,

“0.01%? I got news for ya, that’s not below market-that’s free!”

The report went on to note that the free loans were then loaned back out by the receiving banks. It’s estimated the banks receiving the secret bailout gained a profit of $13 billion.

According The New American’s Thomas Eddlam,

“The Bloomberg report noted that top Wall Street banks benefited most from the deal. ‘The big six — JPMorgan, Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs Group Inc., and Morgan Stanley — took 63 percent of the Fed’s emergency-loan money as measured by peak daily borrowing,” the San Francisco Chronicle observed November 29 of the Bloomberg data.’”

Added Eddlam,

“The evidence also reveals that Federal Reserve intervention in the market helped the ‘too big to fail’ banks get bigger still. ‘Records shows that during the past five years, total assets at the largest six banks increased by almost 40% and executive compensation rose by 20% — more than $146 billion in compensation last year alone,’ USA Today reported November 28.’”

The lack of transparency and unaccountability of the Federal Reserve has created some rather strange bedfellows. Lifelong critic of the Fed and 2012 Republican presidential candidate, Congressman Ron Paul has joined with Democratic Congressman Dennis Kucinich numerous times in pushing for an audit of the Federal Reserve. Paul is well-known for his advocacy of a market-based currency and allowing for competition of currency. Kucinich has not gone that far but he has created a new bill, (the NEED Act) to drastically limit the power of the Fed.
In his latest “Kucinich Report”, he outlines the necessity of bringing accountability to the Federal Reserve saying,

“Ten million homes are in jeopardy. Fourteen million people out of work. Fifty million without health care. Endless wars. The Fed creates money out of nothing, gives it to banks, banks keep it on deposit, gain interest, pay high bonuses — fat city — while the rest of America falls apart. The Fed creates money out of nothing for the banks. Meanwhile, the rest of us have to be stuck in a debt-based economic system? I don’t think so…now do you understand ‘Occupy Wall Street’?”

There’s no denying genuine progressives such as Congressman Kucinich and much of OWS aren’t going to find complete agreement with libertarians like Congressman Paul and many among the Tea Party; however, such pressing issues can bring together coalitions of individuals across the spectrum to work towards common goals without sacrificing principle. Whether you view the “1%” as those with most of the money or as those with most of the guns, if we abandon the fictional narrative contrived of vitriol and platitudes by the establishment we may find that we have more in common with each other than we do with politicians or talking heads.