RSN Fundraising Banner
FB Share
Email This Page
add comment
Print

Excerpt: "There is a fascinating new study coming out of the Levy Economics Institute of Bard College. It's titled '$29,000,000,000,000: A Detailed Look at the Fed's Bail-out by Funding Facility and Recipient' by James Felkerson. The study looks at the lending, guarantees, facilities and spending of the Federal Reserve ... The net total? As of November 10, 2011, it was $29,616.4 billion dollars."

$29.6 trillion may be the new bail-out total, 12/09/11. (photo: File)
$29.6 trillion may be the new bail-out total, 12/09/11. (photo: File)



Bailout Total: $29.616 Trillion Dollars

By Barry Ritzholz, The Big Picture Blog

09 December 11

 

Some readers have expressed confusion about what appears to be a discrepancy in the article between the numbers 29.616 trillion dollars and 29,616.4 billion dollars. Please note the decimal point in one and the comma in the other. There is no discrepancy. The two figures are merely different expressions of the same number, as pointed out in the article. -- CW/RSN

 

here is a fascinating new study coming out of the Levy Economics Institute of Bard College. Its titled "$29,000,000,000,000: A Detailed Look at the Fed's Bail-out by Funding Facility and Recipient" by James Felkerson. The study looks at the lending, guarantees, facilities and spending of the Federal Reserve.

The researchers took all of the individual transactions across all facilities created to deal with the crisis, to figure out how much the Fed committed as a response to the crisis. This includes direct lending, asset purchases and all other assistance. (It does not include indirect costs such as rising price of goods due to inflation, weak dollar, etc.)

The net total? As of November 10, 2011, it was $29,616.4 billion dollars - (or 29 and a half trillion, if you prefer that nomenclature). Three facilities - CBLS, PDCF, and TAF -  are responsible for the lion’s share - 71.1% of all Federal Reserve assistance ($22,826.8 billion).

One comment about some of the folks pushing back against this massive total: Yes, there is a big difference between a $100 lent for 3 days, and a $100 lent overnight rolled over 2 more times. And there is an enormous difference when temporary overnight lending lasts for three years.

Overnight lending, by its definition, is temporary, short term, lower risk, modest impact. It exists to allow slightly over-extended banks to meet their reserve requirements. But rolling overnight lending repeatedly for 3 years is none of those things. And it makes a mockery of these same reserve requirements, and the protective purposes they are supposed to serve.

The amount of overnight lending reflects how broken our financial system really is. A well capitalized, moderately leverage system does not require this massive liquidity from a central bank - interbank lending should be sufficient. What the data reveals is that the financial sector remains dangerously under-capitalized and overleveraged.

To pretend these were merely minor overnight loans, rolled over once or twice, is foolish, dangerous nonsense.

Cumulative facility totals, in billions

Source: Federal Reserve

Facility Total Percent of total
Term Auction Facility $3,818.41 12.89%
Central Bank Liquidity Swaps 10,057.4(1.96) 33.96
Single Tranche Open Market Operation 855 2.89
Terms Securities Lending Facility and Term Options Program 2,005.7 6.77
Bear Stearns Bridge Loan 12.9 0.04
Maiden Lane I 28.82(12.98) 0.10
Primary Dealer Credit Facility 8,950.99 30.22
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility 217.45 0.73
Commercial Paper Funding Facility 737.07 2.49
Term Asset-Backed Securities Loan Facility 71.09(.794) 0.24
Agency Mortgage-Backed Security Purchase Program 1,850.14(849.26) 6.25
AIG Revolving Credit Facility 140.316 0.47
AIG Securities Borrowing Facility 802.316 2.71
Maiden Lane II 19.5(9.33) 0.07
Maiden Lane III 24.3(18.15) 0.08
AIA/ ALICO 25 0.08
Totals $29,616.4 100.0%

>

Source:
BERNANKE'S OBFUSCATION CONTINUES: THE FED'S $29 TRILLION BAIL-OUT OF WALL STREET
L. Randall Wray
Economonitor, December 9th, 2011
http://www.economonitor.com/lrwray/2011/12/09/bernanke's-obfuscation-continues-the-fed's-29-trillion-bail-out-of-wall-street/

e-max.it: your social media marketing partner
 

Comments   

A note of caution regarding our comment sections:

For months a stream of media reports have warned of coordinated propaganda efforts targeting political websites based in the U.S., particularly in the run-up to the 2016 presidential election.

We too were alarmed at the patterns we were, and still are, seeing. It is clear that the provocateurs are far more savvy, disciplined, and purposeful than anything we have ever experienced before.

It is also clear that we still have elements of the same activity in our article discussion forums at this time.

We have hosted and encouraged reader expression since the turn of the century. The comments of our readers are the most vibrant, best-used interactive feature at Reader Supported News. Accordingly, we are strongly resistant to interrupting those services.

It is, however, important to note that in all likelihood hardened operatives are attempting to shape the dialog our community seeks to engage in.

Adapt and overcome.

Marc Ash
Founder, Reader Supported News

 
+31 # maddave 2011-12-09 16:54
Cheney said it best: Deficits don't matter.

Really.

Would Dick Cheney get something so big so wrong?
 
 
+24 # futhark 2011-12-09 18:40
This was from the party of "fiscal responsibility" that campaigns from time-to-time as an advocate for a "balanced budget amendment".
 
 
+1 # jimyoung 2011-12-11 23:08
They only want it when they aren't in control. Larry Craig's BBA efforts got dumped when Bush got elected and took us $108 billion negative from the inherited 51 billion surplus in just the first 9 months (before 9/11 impact). They also campaigned on being able turn Clinton's $5.6 trillion debt into a $5.6 trillion surplus, but missed by over $15 trillion when they ended with over $10 trillion in just the US public debt (our other debt, household, etc is around $20 trillion). The $29.6164 trillion shown in this article might become more shockingly graphic if you imagine it as:
118,225 square miles of $1 bills (enough to cover all 6 states of New England's ME,NH,VT, MA, CT, RI, and 3 more states of WV, MD, NJ plus 11.78 times the area of Washington DC with a single layer of $1 bills) or
277+ layers of $1 bills (1.19" thick) over 4 lanes of all 46,879 miles of Interstate Highways.
Perhaps some prefer a 48' wide wall of $1 bills, 77.8 feet high, covering 4 lanes of all 64 miles of the I-495 beltway around Washington DC.
I calculated the secretly lent $7.77 trillion as enough to fill the Lincoln Memorial Reflecting pool (2029' by 167') 977 feet high with $1 bills. The $29.6164 trillion would fill the same pool over 3,275' high. It would "only" cover every square inch of the land in Washington DC with a 8.3" (1,925.5 layers of $1 bills).

The velocity of the hoarded money is too low to support ridiculously low taxes.
 
 
-41 # dorianb@fuse.net 2011-12-09 19:07
what about Obama? The bailour happened during his presidency, I believe. Don't mistake this to mean I like cheney because I don't!
 
 
+57 # jon 2011-12-09 19:40
"The bailour happened during his presidency"

Do you remember the name: Henry Paulson?

He was Bush's T-Sec for the 6 months prior to the melt-down - and an ex-CEO of Goldman-Sachs.

When the meltdown happened, Paulson had a 3 page doc he demanded everybody sign - with no explanatory details - to "prevent" disaster.

(I am continually amazed how fast people forget recent history).

Obama inherited the WORST set of circumstances any new President has since Grant and Truman.

His BIGGEST mistake, has been not prosecuting those who got us - the whole world - into this travail.
 
 
-4 # John Locke 2011-12-10 11:23
Don't forget Obama kept the same people Bush placed in office and who created the mess, Obama is just as much to blame
 
 
+27 # Billy Bob 2011-12-09 20:04
It happened before he entered office. However, some aspects of it seem to have continued. He could stop them, but hasn't.
 
 
+57 # samothrellim 2011-12-09 17:22
And no real reform demanded in return! Also, noteworthy that not a penny went to homeowner mortgage relief.
 
 
+10 # John Locke 2011-12-10 11:25
Of course not, and why? since the banks were bailed out without any strings, they were allowed to freely foreclose on our homes...anyone connect the dots now...
 
 
+35 # noitall 2011-12-09 17:23
Beyone the smoke-and-mirro rs, The Fed. 'makes' money, literally, blesses it (in lieu of something tangible, such as GOLD), makes it 'real', puts it on OUR tab (with interest), and in the same motion, puts it into (the collective 'their') pocket and then declares an emergency making it "necessary" to tighten the belt of those who got ripped off in order to cover for the ripper. Business couldn't be better...AND its going on world-wide. Now, having learned from the actions of Iceland, they are creating measures to keep other countries from following suit. In the meantime, those who complain become terrorist suspects and/or sympathizers. You can see how they can't afford ANYTHING that might threaten the fragile bubble upon which they do this dance. All the people have is to get out into the street but most are like the frog languishing in the tub as the ever-rising temperature saps his strength. When the moment comes, it will arise quickly. Like Bukowski said, "The bacon is burning".
 
 
+3 # perkinsej 2011-12-09 18:16
The author failed to mention that the Treasury and Fed ended up making a profit on these transactions.
 
 
+2 # John Locke 2011-12-10 11:27
Really where? or How? most is still outstanding!
 
 
+4 # ruralhorseman 2011-12-10 15:32
Quoting John Locke:
Really where? or How? most is still outstanding!


Hey All: In economics you must remember whether you invest or borrow, the cost of your action is the actual percentage rate you are paying in interest MINUS the inflation rate. This point makes the whole deficit argument mute. The current rate of inflation is around 2.5 per cent (last time I checked) on average for the 3 years Obama has been in office. So the Fed lends at one percent interest (or so, again not checked recently and inflation is 2.5. = 1-2.5= -1.5 ACTUAL Interest Rate in real dollars. So the government is making 1.5 percent on what it borrows which is a small good thing because our social security donations are invested in U.S. Treasury Bonds, so we, the people are making some money and the "government" is too, WHEN ACCOUNTING TAKES IN INFLATION
 
 
+4 # CandH 2011-12-10 11:48
KPFA.org, Letters & Politics, Dec 2, 2011, 10:00am, 14:58-17:05 - Guest: Gerold Friedman, Professor of Economics, University of MA - Amhurst -- Discussing should European bank lending seize up due to large EU states sovereign debts, like Italy and Spain notably, defaulting on them…

"G: It's not clear that they (the US) could take the type of action they took in 2008 (to unfreeze the credit markets.)
H: You mean like the TARP, the Federal Reserve…I guess the Federal Reserve has also pumped in another $7Trillion into the economy that we just found out about.
G: That right. That's right. Way bigger than TARP. Yeah.
H: 8x bigger.
G: Yeah, yeah, yeah, yeah. A couple years ago, the Treasury put out, hey, we made money on TARP. Well, the reason the Treasury made money on the TARP is because basically we sold all the bad assets that we bought under TARP, and we sold all the bank stock to the Federal Reserve, which has a huge portfolio of bad mortgages now.
H: But that's why?! Because my understanding was that the banks paid TARP off.
G: Yes, with money they got from the Federal Reserve by selling mortgages to the Federal Reserve.
H: From that $7Trillion that was pumped in?
G: Yeah, that was, that was…the money…that's part of the money the Fed was pumping in, was buying up bad mortgages." (http://www.kpfa.org/archive/id/75658)
 
 
+33 # Vern Radul 2011-12-09 18:45
The banks would be doing just fine if rather than bailing out wall street over the subprime mortgage mess they created for themselves and everyone else, the administration and the fed had instead paid off every mortgage in the country, subprime or not, for less money (only about 12 trillion) than the 29 1/2 trillion they gave wall street as a reward for pillaging the economy. This could even have been done with tax credits thus avoiding any outlay of money from the fed.

It would have restored the value behind the CDO mortgage backed securities that wall street got themselves into so much trouble with, and thus saved wall street while tremendously boosting the consumer driven economy as the money would have gone directly to the mortgage holding banks while at the same time effectively doubling the amount of bailout money by lifting a enormous debt weight from all those homeowners who would then have had an equivalent amount of disposable funds to spend any way they chose.

The US consumer economy would be rockin' by now - maybe even enough to pull the rest of the world out of the hole.

Now, had this been done Obama and the Democrats would likely have lost all future donations from wall street and they'd be whining so loud we couldn't hear ourselves think - those donations of course were more important to Obama than bailing out homeowners instead of the party's corporate owners.
 
 
+13 # Doubter 2011-12-09 20:28
How come only you and I ever make this suggestion?
It seems so obvious unless you are a bankster.
 
 
-6 # Vern Radul 2011-12-09 20:41
Because....

Obama has appointed neoliberal advisers. The deal that he made when he was elected was that he would get Wall Street's campaign financing in exchange for appointing Larry Summers and Tim Geithner and other Wall Street people. And the financial sector all over the world is opening a class war against labor from the United States to here. Mr. Obama's intention is to reduce wages here by between 20 and 30 percent, and that requires a recession--or, actually, it requires much more than a recession; let's just say depression.
[snip]
His objective is to create more unemployment, in the belief that if you cut back employment, wages are going to go down, and if wages go down, that will create higher profits. That's sort of a bizarre belief, and he's willing to bring on a recession in order to serve the neoliberal philosophy.

Michael Hudson
http://antemedius.com/content/two-party-con-job-president-super-committee-and-attack-labor
 
 
+8 # John Locke 2011-12-10 11:39
I understand your frustration, however I don't believe Obama is part of any such conspiracy as you see...first the Fed is mandated to create full employment, they have never done so, at best we have had a 4. unemployment which is still several million unemployed, this is deliberate, if we have full employment Labor demands capital, if we have millions unemployed Capital commands labor, that is real economics... the unemployment rate is a function of the Federal Reserve System and actually is one major reason to abolish it, because it has never lived up to its primary mandate, to create FULL EMPLOYMENT...
 
 
+6 # CandH 2011-12-10 12:02
Catherine Austin Fitts explained this same, albeit differing reasoning scenario on KPFA.org's Guns and Butter program, on Nov 9 (Part II:) http://www.kpfa.org/archive/id/74988. Part I is interesting as well (previous week's show.)

Austin states that worldwide inflation is to be controlled by a controlled 1st world wage deflation policy (ie eliminate unions, social services, wage contracts, support "austerity," to eliminate the floor on wages worldwide (and any and all social contract supports of consumer spending.))
 
 
+4 # John Locke 2011-12-10 11:33
That is a good point and has been raised many times, we, meaning some of us understand this, but it seems most don't get it...and lets be honest, Obama is on the banks payroll, he did what he was told to do.... it wasn't about being fair to US the 99% but to his handlers...thos e whose finance his bid for office...and the courts protected the criminal banks, and still are... only a handfull of judges are ruling against the banks, although that ratio seems to be improving...thi s entire economic crash could have been avoided if our "leaders" had been honest and had looked out for America!
 
 
+3 # BLBreck 2011-12-10 22:53
Thank you, Antemedius, you said it all for me! Although this in so many ways more "practical," in my opinion sensible, not to say moral, action would not have fit in with what seems to be a psychotic need to break the back of the working class and steal any power they have for collective bargaining and what little is left of their wealth. In my book anyone who can allow so much suffering to occur all over the world while they have so much more than they need to live beyond comfort and spend $10,000 or more for one night out on the town, stepping over some poor homeless person on their way out of a club like they aren't even there and knowing that children go to bed hungry every night is greedy to the point of psychosis.
 
 
+18 # wrodwell 2011-12-09 18:55
This only means one thing: Hey, there's still more money out there to be looted so let's encourage the 1%ers to get cracking before the full force of global warming really ramps up. Guys, there isn't much time left! After they've finished, we'll see if fat pigs can swim.
 
 
+6 # John Locke 2011-12-10 11:40
They will look for us to rescue them!
 
 
+4 # Douglas Jack 2011-12-09 19:01
In order to understand our dilemma, we do well to understand how we got here. The origin of 'money' is 'mnemosis' = 'memory'. In humanity's universal sustainable 'indigenous' (Latin = 'self-generatin g') heritage, capital, currency, condolence (social security), diplomatic conveyance (inter-governme ntal compensations), communications, college (education) and other community values were integrated into a systematic accounting system through the string-shell of the Production Societies found on every habitable continent. A constellation (Indigenous Circle of Life) of social-economic & governance practices kept equilibrium for hundreds of thousands of years. We've all been alienated by 'exogenous' (L = 'other-generate d') colonial-empire institutions and can go further by understanding who we are. https://sites.google.com/site/indigenecommunity/home/indigenous-circle-of-life
 
 
+7 # alanterentiv 2011-12-09 19:09
Wow! The banks are over leveraged and under capitalized? No duh!!! I sure as s#%t wish the inflation hawks would educate themselves on how the economy "works". Any way, the banks need that bailout money since they got so over leveraged. I just wish the folks in the trenches could get some of that love. There's no doubt about it. We need debt forgiveness. How could we all pay those debts off when none of the money exists? We need to MAKE it exist, but this time NOT in the form of debt.
 
 
+21 # giraffee2012 2011-12-09 19:33
Where is this money? This is only part of the story. We know they "gamble" with the money that comes into their hands (by us, the FED, whatever) - but it they lose their bets (which they did in 2008 - partly) - there were winners to their losses.

It appears to me that a small number of things (corporations with "person hood") are going to rule the world while we talk about "abortion" "Social Security/Medica re/ Medicaide/ Lunch money for hungry children (elderly) / and reducing a debt (which the GOP doesn't understand that is MONEY SPENT on wars + whatever)

So the focus must go to the money that we as a country will owe to "those winners" - unless it is in the pockets of the unregulated gamblers (I mean bankers and investors) - and stop arguing about a 6% tax hike or a .03 tax hike to pay for the 6%.

The Patriot Act was passed while we watched the Shibo case on TV 24/7! (Thanks Cheney/Bush) - etc.

Get the money out of elections.
Call your Congress people and tell them if they don't vote to "regulate banks" -- you won't vote them back in "NO MATTER what other issues there are"

Do NOT vote for the Norquist CULT! Period. Do NOT vote for anyone who is supported by Koch/ Rove (watch for their negative ads - because the 2010 Supreme "person hood" decision allows for non-disclosure. I'll post the petition by B. Sanders to "get the person hood out
 
 
+19 # giraffee2012 2011-12-09 19:42
Please sign the Bernie Sanders amendment to get the "person hood" decision overturned

http://sanders.senate.gov/petition/?uid=f1c2660f-54b9-4193-86a4-ec2c39342c6c

Letter to editor

http://sanders.senate.gov/petition/?uid=c1fd7f9b-abd8-4e7a-a370-1867881259d8

Michigan has used some emergency law -- whereby the GOP governor has stolen the government -- whereby Dems won't get to vote -- worse than Wisconsin! Somebody should "occupy Koch" and "Supremes" -- who are apparently in bed -- (obviously)

Is this USA? Do NOT vote for a GOP! NONE. Koch is funding the TP Congress people -- DON'T re-elect them unless you are deaf/dumb (excuse me for being so rude) -- but this must stop
 
 
+10 # jooberdoober 2011-12-09 19:42
I'm sure everyone filled their own pockets with all of that FREE money whilst regular people still try to eek out a living or even find a job!
 
 
+19 # LizR 2011-12-09 20:03
Wow! For that sort of money you could do something about the ecological catastrophe, maybe set up a green economy - you might even save the world.

Unfortunately there are people "running" the world who still think the economy trumps the environment. These people can now only be called terminally stupid. Obviously, putting the apes in charge was an evolutionary mistake...
 
 
+18 # CesareBorgia 2011-12-09 21:09
Rather than inject all that cash into over-leveraged, insolvent banks, we should of let them fail and given the money to smaller, local financial institutions that weren't awash in red ink. Or, create new banks with pristine balance sheets that would than have been motivated to make loans. All we did was try to fill up a black hole and that's why none of this money has found it's way into the real economy. Paulson and Geithner should be the first ones breaking rocks in Leavenworth!
 
 
+14 # fredboy 2011-12-09 22:09
More than all the social welfare in recorded history.
 
 
+11 # tonenotvolume 2011-12-09 23:53
For an idea of what 29 trillion dollars physically looks like, go to http://www.pagetutor.com/trillion/index.html. It's roughly a football field of double-stacked pallets filled with $100! dollar bills 174 feet high. If you live in San Diego, about 30 feet of the pile would stick up out of Qualcomm Stadium (my own calculation). Here's a list of what could be done with just one trillion dollars http://www.cosmoloan.com/money-management/what-can-you-buy-with-a-trillion-dollars.html
 
 
+8 # mwd870 2011-12-10 09:19
I don't understand where these trillions of dollars come from. Who makes the decisions to continue bailing out the financial institutions? Until this is resolved, Congress should be ashamed for even thinking about cutting spending that helps the middle and lower classes. I hope OWS is just the first step in fighting this blatant hypocisy.
 
 
+3 # John Locke 2011-12-10 11:44
It is!
 
 
+4 # alanterentiv 2011-12-10 12:05
According to "Web of Debt" , money is created when a bank loans money. A bank does not "have" money in an account and then lend it to you. It is created when you borrow it. That's why people say " money is debt".
The Fed makes the decision to bail out the banks because the banks were able to over-lend due to financial deregulation. During that time of over-lending(wh ich created the housing bubble) is when money was being "printed" aka loaned and THAT is when all the inflation occurred. Now that the banks realize their isn't enough "real" money out there ( money which is a positive in bank accounts, rather than money which is owed) to cover all the loans they made, the Fed is just putting it into their accounts to cover at least some of it. Apparently, they need more, or else they would be unleashing some of it into the "real " economy.
 
 
+1 # Shadow 2011-12-12 15:57
Of course they need more! How else can they pay out their bonuses?
 

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.

RSNRSN