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Friday, December 3, 2010

Senator Awesome lifts the curtain on the financial crisis

The only problem I have with Bernie Sanders is the fact he isn't my senator.

These banks aren't doing anything for the American people. It's time we took a hard look at the systematic structural problems our current economic model is diseased with.

"The Federal Reserve has made public an enormous trove of data about the emergency measures it took during the worst of the credit crunch and the ensuing recession. It's confusing stuff: arcane spreadsheets showing more than 21,000 transactions totaling more than $3.3 trillion via an alphabet soup of programs. (Gratuitous example: the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, or, well, ABCPMMMFLF.) Still, the revelations provide a fascinating glimpse into the workings of the Fed in the apocalyptic days of 2008, when the world economy was on the verge of collapse. They also leave one major question unanswered.

First things first: Why did the notoriously shy Fed post the detailed data this week? Because Congress forced it to. The Dodd-Frank financial-reform law included a provision, authored by longtime critic of Fed secrecy Sen. Bernie Sanders, requiring the disclosure of the information by Dec. 1. Right on deadline, the central bank opened up.

During its multitrillion-dollar rescue of the financial system, the Fed continued its usual policy of omertà, shrugging off requests from politicians and journalists for information about the trillions in emergency loans it was making. By way of explanation, the Fed told Bloomberg at the time that the country was facing "an unprecedented crisis" wherein "loss in confidence in and between financial institutions can occur with lightning speed and devastating effects." Essentially, the Fed worried that more information might make a very bad situation even worse.

But now—with the recovery under way and bank profits healthy again—the Fed has coughed the data up. The trove shows which firms used what facilities, when, for how much, and on what terms. (The Wall Street Journal has a handy tool so that the curious don't need to wade through spreadsheets.)

It makes for interesting reading—or, at least, holds some interesting revelations even for those not tickled by the sight of spreadsheets. Consider the case of investment-banking giant Goldman Sachs, whose transactions with the Fed are here. The company, among the most profitable on Wall Street, has boasted that it would have been able to survive the crisis without government assistance. President Gary Cohn said it explicitly in Vanity Fair last year, in a piece by my fellow Moneybox columnist Bethany McLean. "I think we would not have failed," he said. "We had cash."

Meanwhile, Senator Awesome will continue to illustrate and infuriate me (in a good way) about how corporate oligarchy poisons our Democracy.

The rest is here:

Bankers, Wallstreet terrorists and business elites alike beware, Bernie Sanders has come to do two things...

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