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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

December 1, 2010 at 9:50 AM

The Fed’s secret $3 trillion bailout sees sunshine

The most controversial actions of the Federal Reserve during the Great Recession, especially in the panic of the fall of 2008, were the secret lending facilities it made available to banks, investment houses and corporations. They are secret no more, thanks to the Dodd-Frank financial overhaul bill. Today the Fed released details on 11 programs totaling $3.3 trillion.

Some 21,000 transactions are in the report, which lists the borrowers and the amounts involved in the transactions. The legislation was partly aimed at seeing if conflicts of interests in the powerful financial industry distorted Fed policy. The central bank claims it has faced no losses on programs that have been shut down and doesn’t expect any on the others. We’ll see. Like WikiLeaks documents, this will require some scrutiny. Nor is it likely to stop a bipartisan effort for an audit of the Fed.

The Financial Times Alphaville blog is first out with a guide to the Fed dump.

The Fed’s actions will remain controversial. They arguably prevented a second Great Depression. But along with a bought-off Congress, the central bank helped preserve the fraud-and-crash prone fundamentals of the financial system. It also, as David Wessel argues in his book, In Fed We Trust, raised serious questions about such a powerful and secretive institution in a democracy.

Today’s Econ Haiku:

Can’t wait for Wiki

To leak dirt on BofA

Quakin’ in Charlotte

Comments | More in Bailout, Federal Reserve, Great Recession

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