Wednesday, December 1, 2010

Fed's Secret Loans To Be Revealed Today

During the financial meltdown of 2007-10, the Federal Reserve secretly loaned trillions of dollars to -- well, we don't know exactly who. Morgan Stanley and Merrill Lynch are good guesses. Today we'll find out who got the Fed's bailout because the new financial reform law requires the Fed to disclose that information. These emergency loans are in addition to the TARP, by the way.

Some things we do already know about the loans. For example, the Fed has loaned money to random companies like Red Roof Inn, according to Matt Stoller in a posting today on the Naked Capitalism blog. We also know the Fed funneled $13 billion through AIG to Goldman Sachs. Stoller calls that
a direct transfer of $80 from every working American to the employees of Goldman Sachs.
The Fed has a lot of real power, Stoller says. But it doesn't always know what it's doing. The Federal Reserve missed the speculative bubbles that burst over the past decade.

It should be interesting.