One thing in common among all Americans that pay attention to politics is that they are rightly suspicious of is the Federal Reserve. It operates in secrecy. Its leaders speak in riddles, particularly in the days of the overly confident Alan Greenspan. Its track record has been mediocre–the recent crisis as well as the Great Depression both occurred on its watch.
But the TARP and related events really exposed its deep corruption. The good of the “banking system” took precedence over the economic interests of the vast majority of Americans, who did not have significant amounts exposed to loss that were in excess of FDIC limits. But now we learn that foreign banks and other entities were given a $7.7 Trillion(!!!) line of credit during the height of the 2008 economic crisis and used this super cheap money to buy government T-Bills and, thereby, to make a significant profit at the expense of the US taxpayer. The taxpayer become the real lender of last resort to risk-taking Wall Street and foreign banks and institutions.
With all the money floating around, it’s remarkable how few loans were modified, new businesses started, or much else of enduring economic value took place in the last 3 years. If the goal was recapitalization why did the Fed go directly to the banks with the free money; why not give it to the depositers with big penalties for early withdrawal? Banks largely recapitalized themselves with this money, shifted the losses of their mortgage backed securities to the same Federal Reserve (i.e., the taxpayers), and used cheap, taxpayer-subsidized money to engage in marginally useful activities like currency arbitrage and the purchasing of higher interest government securities of one kind or another.
Americans have not had their government bank’s purpose, activities, and beneficiaries explained to them in an open and transparent manner. The sheer complexity of it all, as well as long established habits of secrecy, are all that is protecting these deeply corrupt actors.