The trouble with the Fed’s secret bailout - Federal Reserve - Salon…
The trouble with the Fed’s secret bailout The Federal Reserve has come clean about its covert actions. Now it’s time to look at the worrisome consequences The U.S. Federal Reserve Building in Washington The Federal Reserve has finally came clean. It now admits it bailed out Bear Stearns – taking on tens of billions of dollars of the – in order to smooth Bear Stearns’ takeover by JPMorgan Chase. The secret Fed bailout came months before Congress authorized the government to spend up to $700 billion of taxpayer dollars bailing out the banks, even months before Lehman Brothers collapsed. The Fed also took on billions of dollars worth of AIG securities, also before the official government-sanctioned bailout. The losses from those deals still total tens of billions, and taxpayers are ultimately on the hook. But the public never knew. There was no congressional oversight. It was all done behind closed doors. And the New York Fed – then run by Tim Geithner – was very much in the center of the action. First, only Congress is supposed to risk taxpayer dollars. The Fed is not part of the legislative branch. Its secret deals, announced almost two years after they were done, violate the …
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