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OLBERMANN: Three years after the big bank bailout, secrets are emerging — including the one about the $13 billion in profits the banks made, thanks to below-market loan rates from the Federal Reserve. Our fourth story on the “Countdown” — a kind of smoking gun, proving your worst fears about the 2008 public welfare checks from taxpayers to banks who describe themselves as “too big to fail.” And it was called “income redistribution.”
In its new issue, Bloomberg Markets magazine reporting how the banks used secrecy and opportunism to get bigger, richer and more powerful, while citizens lost their jobs, their savings and their homes. No wonder the Fed and banks kept the details secret, until Bloomberg reporters and editors pried loose 29,000 pages of documents via a Freedom of Information request.
Let’s flashback to this exchange from January 2009, when then-Congressman Alan Grayson of Florida grilled Donald Kohn, then the vice chairman of the Fed. Grayson, who will join us in a moment, wanted to know what banks got what loans and from how much and Kohn ducked the question and implied it was none of Grayson’s business, nor the public’s.
(Excerpt from video clip) ALAN GRAYSON: And you’re saying that that entitles you to keep secret the expenditure of $1.2 trillion — $4,000 for every man, woman and child in this country?
(Excerpt from video clip) DONALD KOHN: I don’t think we’re keeping it secret. I think we’re releasing a lot of information about it, but I would, personally — I have no — I don’t, you know, the — I would personally be very, very reluctant to release the individual names of the borrowers.
(Excerpt from video clip) GRAYSON: What do you think might happen if people knew how their $1.2 trillion had been spent? Do you think they might be angry?
(Excerpt from video clip) KOHN: No. I don’t know, obviously. I think that they can judge how the money is spent from what — or how the money is lent from what we’re telling them.
OLBERMANN: And what if the public was told more?
Senator Sherrod Brown of Ohio suggesting Congress would have been less generous. He told that Bloomberg magazine, “This is an issue that can unite the tea party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”
Joining me now — former United States representative, current congressional candidate, Alan Grayson. Good to talk to you, sir.
ALAN GRAYSON: Thank you.
OLBERMANN: Did this news just prove you correct from that hearing in 2009?
GRAYSON: Yes, I’m often proved correct, Keith, but usually faster than this. It usually doesn’t take this long. But I am pleased that we were able to go — join with Ron Paul, who introduced legislation to accomplish just this, 26 years earlier — and get a full and complete audit of the Federal Reserve, which has now shown $16 trillion in money lent out directly from the Federal Reserve to institutions — various institutions, including many foreign institutions. About a third of the money, it turns out, went to foreign institutions.
And then, on top of that, another $10 trillion in currency swaps between the Federal Reserve and foreign central banks, which they had no way to recover if the foreign central banks weren’t able to get the money back themselves. So, all together, $26 trillion of bailouts, just in those two categories — not including TARP, not including FDIC financing of U.S. institutions — $26 trillion. That’s almost $100,000 for every man, woman and child in America, all done by the Federal Reserve without any act of Congress authorizing it.
OLBERMANN: All right, there is a lot of numbers thrown around here and sometimes — when you just hear abstractly — 13 billion sounds like it’s larger than seven trillion. Which — of all of these numbers — which outrages you the most and which should outrage the public the most?
GRAYSON: I think that the — we can all agree the trillions of dollars — the trillions of dollars that were extended by the Federal Reserve to the banks in the form of corporate welfare. What they did is they took our money, the U.S. dollar — the fact that they control the currency, the fact that they have the control of the money supply — and, for the first time in history — and I’m talking about in the 100-year history of the Federal Reserve — they played favorites.
They said, “We’ll give $100 trillion to this institution, 100” — sorry, $100 billion — “to this institution, another $100 billion to this institution,” and so on, down the line, when you and I couldn’t even come close to accessing that kind of money on those terms. They lent out this money at 0.01 percent interest. Zero point zero one percent interest. Go try to get a loan like that from your bank.
It was corporate welfare, pure and simple, and what they were doing is they were playing around with the value of the money in your pocket and the money in my pocket. They were taking the U.S. dollar and playing Russian roulette with it — giving it out in enormous, staggering sums, in the hope that they might get it back. Well, they did get most of it back, but what about next time?
OLBERMANN: In this time — when any time grandma gets a Social Security check, some liberal or Democrat is accused of favoring socialism — this sort of strikes me as kind of not just a corporate socialism, but — as you suggest — a corporate socialism that picked out individual favorites among those who were going to get the money redistributed to them. Is that a — a fair analogy?
GRAYSON: That’s absolutely true, and what the GAO audit shows is that the Fed cannot explain why they chose one institution over another institution. All that anybody had to do was make noises about liquidity — liquidity or stress — and somehow that would justify the transfer of billions of dollars of what amounts to your money and my money.
You know, again, to give you a sense of what this is like, $16 trillion, $10 trillion — that’s much more than the U.S. entire federal budget for the course of a year. In fact, that’s more than all of the goods and services that we produce in the United States in the course of a year.
So, the Fed was handing out — to these select, favorite institutions — more money than it takes you and I to produce — and everyone in America, all 300 million of us — to produce in the course of an entire year, without any authorization. This was not voted on by Congress. This is just handouts from the Fed.
OLBERMANN: The mind reels. Bloomberg — the Bloomberg trade paper — says it’s going to release another report tomorrow, and it’s going to be about Treasury Secretary Paulson meeting secretly with hedge fund managers — and this is in December of 2008 — to discuss his plans for Fannie Mae. What are you expecting from that?
GRAYSON: Well, there were massive conflicts of interest. The regional banks of the Fed are actually populated and controlled by the local banks. And all of these bailouts were actually administered by the Federal Reserve Bank of New York, which has on its board many Wall Street executives. I’m talking about current Wall Street executives, not the Tim Geithners of the world — the people who used to be or in the future might work for Wall Street — but the current Wall Street executives actually on the board, making decisions about who would get what for themselves. It’s — it’s rife with conflicts of interest.
Barney Frank, to his credit, has introduced legislation to end that and the Republicans, I’m sure, will stop that.