Series: Governments submit to “Too Big to Fail” banks (part 4)
29 September 2014 by Eric Toussaint
Since 2008, the Fed
FED
Federal Reserve
Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.
FED – decentralized central bank : http://www.federalreserve.gov/
has granted unlimited credit to banks at an official rate of 0.25%. In fact, as the General Accounting Office (GAO) has revealed, the Fed has lent close to $16 trillion at an interest
Interest
An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set.
rate below 0.25%. [1] The report shows it has not followed its own prudential rules and has not notified Congress.
According to an enquiry by a US Congress Committee, there is clear and evident collusion between the Fed and the big banks:
The CEO of JPMorgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JPMorgan Chase served as one of the clearing banks for the Fed’s emergency lending programs. [2]
According to an independent study by the Levy Institute, which has the collaboration of economists such as Joseph Stiglitz, Paul Krugman and James K. Galbraith, Fed assistance to banks was much more than the $16 trillion revealed by the GAO; it was $29 trillion dollars. [3]
The big European banks had access to Fed funds until the beginning of 2011. Dexia got a loan of $159 billion dollars, [4] Barclays $868 billion, Royal Bank of Scotland $541 billion, Deutsche Bank $354 billion, UBS $287 billion, Crédit Suisse $260 billion, BNP-Paribas $175 billion, Dresdner Bank $135 billion and Société Générale $124 billion. The end of this funding, under pressure from Congress, was one of the reasons that from May-June 2011, the US Money Market Funds
MMF
Money Market Funds
Mutual investment funds that invest in securities, including money funds.
started to block their loans to European banks, considering that without support from the Fed the European banks incurred too high a risk.
The Federal Reserve System of the United States
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Translation : CADTM
Éric Toussaint, is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège. He is the President of CADTM Belgium (www.cadtm.org), and sits on the Scientific Council of ATTAC France. He is the co-author, with Damien Millet of Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He is the author of many essays including one on Jacques de Groote entitled Procès d’un homme exemplaire (The Trial of an Exemplary Man), Al Dante, Marseille, 2013, and wrote with Damien Millet, AAA. Audit Annulation Autre politique (Audit, Abolition, Alternative Politics), Le Seuil, Paris, 2012.
[1] GAO, “Federal Reserve System, Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance”, July 2011, http://www.gao.gov/assets/330/321506.pdf. This report, was made possible by an amendment to the Dodd-Frank act that had been introduced by Ron Paul, Alan Grayson and Bernie Sanders in 2010. Bernie Sanders, an independent Senator made it public http://www.sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf
[3] See James Felkerson, “$29,000,000,000,000: A Detailed Look at the Fed’s Bailout by Funding Facility and Recipient”, www.levyinstitute.org/pubs/wp_698.pdf
[4] See, in particular, page 196 of above mentioned GAO report that refers to loans to Dexia amounting to $53 billion, which are only a part of the total loans to Dexia by the Fed. http://www.gao.gov/assets/330/321506.pdf
is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.
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