These documents show how top government officials willfully concealed from Congress and the public the true extent of the 2008-'09 bailouts that enriched the few and enhanced the interests of giant Wall Streets firms. Here’s what we now know:
- The secret Wall Street bailouts totaled $7.77 trillion, 10 times more than the $700 billion Troubled Asset Relief Program (TARP) passed by Congress in 2008.
- Knowledge of the secret bailout funds was not shared with Congress even while it was drafting and debating legislation to break up the big banks.
- The secret funding, provided at below-market rates, gave Wall Street banks an additional $13 billion in profits. (That’s enough money to hire more than 325,000 entry level teachers.)
- The secret loans financed bank mergers so that the largest banks could grow even larger. The money also allowed banks to step up their lobbying efforts.
- While Henry Paulson (Bush’s Secretary of the Treasury) was informing Congress and the public that only minor reforms were needed to protect Fannie and Freddie from collapse, he met secretly with leading Wall Street hedge fund managers -- among them his former colleagues at Goldman Sachs -- to alert them that he was about to nationalize the giant mortgage companies – a move that would eradicate nearly all the stock value of the companies. This information was enormously valuable because it allowed these hedge funds to short Fannie and Freddie and thereby make a fortune.
- For every $100 in bailout funds handed over to healthy banks,
the American taxpayer received just $78 worth of assets, according to a
report by the Congressional Oversight Panel (COP) chaired by Elizabeth
Warren. The exchange rate for struggling banks was $44 for every 100
taxpayer dollars.
All in, COP reported, Treasury paid $254 billion, for assets worth just $176 billion — a stealth bailout of $78 billion to the financial sector never approved by Congress, including a cool $2.5 billion for Paulson’s cronies at Goldman.
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