In 2007, when I heard that Lehman Brothers collapsed (and lost a fair amount of money in the stock market), it was quite clear that we were close to a collapse of the entire economic system. As a college sophomore at the time, I did not know if I would be able to get student loans from the government or the private sector to finish school. I was an economics student and I knew what could be if things truly got bad. Luckily TARP and other rescue measures were pushed through Congress and the economy was saved from ruin. There was extensive arguing about the $700 billion bill — a significant portion of which was provided by the Federal Reserve — but most knew without it the economy would have crumbled.
There have been calls to audit the Federal Reserve for years, but usually to no avail. Prominent political figures, suchas Texas Congressman Ron Paul, railed for years about how the Fed needed to be audited. I figured that this course of action is probably not the best one because it would affect the economy as a whole. After doing research about the formation of Federal Reserve and deep thought, I changed my mind and agreed that the Fed should be audited.
To those who do not know, the Federal Reserve is a “quasi-governmental” body. It is not a government entity and it is not a private entity. The Fed is owned by private banks who hold shares in the system. While the banks that have stakes in the Fed are typically audited, the Fed itself has never been audited. The first ever audit has been conducted over the last few months due to an amendment in the Dodd-Frank Bill. The results were truly staggering. Over $16,000,000,000,000.00 has been given in bailouts to banks and other corporations throughout the world from December 2007 – June 2010. Remember, that is just for a three year period. The Federal Reserve has been in existence since 1913. This $16 trillion dollar figure surpasses both the national debt and the annual gross domestic product for the United States.
According to the TARP, only $700 billion was supposedly given out to faltering banks and companies. However, Citigroup alone received $2.5 trillion. The Fed loaned money to banks in France, Scotland, and Belgium. Here is the list of some institutions that received the most money on page 131 of the report:
Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
According to Senator Bernie Sanders, “This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else.”
Since private banks hold ownership stakes in the Federal Reserve, they have an incentive to bail each other out, but not to bail out individuals with issues such as mortgage loans, car loans, student loans, etc. The banks are in business for themselves and will do what it takes to survive. The Federal Reserve is "Federal" in that it conducts business with the federal government. The main issue is most Americans do not know what the Federal Reserve is, what it does, its ownership structure or of its operations. Is the Fed really acting in the interests of the United States by witholding information of their operations from its citizens?