Tally Shows That the Federal Reserve Is The Real Source of Bailout Funds
Today, the Real Economy Project of the Center for Media and Democracy
(CMD) released an assessment of the total cost to taxpayers of the Wall
Street bailout. CMD concludes that multiple federal agencies have
disbursed $4.6 trillion dollars in supporting the financial sector since
the meltdown in 2007-2008. Of that, $2 trillion is still outstanding.
CMD's assessment demonstrates that while the press has focused its
attention on the $700 billion TARP bill passed by Congress, the Federal
Reserve has provided by far the bulk of the funding for the bailout in
the form of loans amounting to $3.8 trillion.
Little information has been disclosed about what collateral taxpayers
have received in return for these loans, sparking the Bloomberg News
lawsuit covered earlier. CMD also concludes that the bailout is far from
over as the government has active programs authorized to cost up to
$2.9 trillion and still has $2 trillion in outstanding investments and
Learn more about the 35 programs included in the CMD tally by
visiting our Total Wall Street Bailout Cost Table, which
contains links to pages on each bailout program with details including
the current balance sheet for each program.
Treasury Dept. Self-Congratulation Premature
While the Treasury Department has been patting itself on the back for
recouping some of the Troubled Asset Relief Program (TARP) funds and
allegedly making money off of its aid to Citigroup, the CMD accounting
shows that TARP is only a small fraction of the federal funds that have
gone out the door in support of the financial sector. Far more has been
done to aid Wall Street through the back door of the Federal Reserve
than through the front door of Congressional appropriations.
The tally shows that more scrutiny needs to be given by policymakers
and the media to the role of the Federal Reserve especially as the Fed
has accounted for the vast majority of the bailout funds, yet provides
far less disclosure and is far less directly accountable than the
Download the Financial Crisis Tracker
In addition to a comprehensive here
Wall Street Bailout Table which will be updated monthly as a
resource for press and the public, CMD is also making available a Financial
Crisis Tracker, a widget that links to the table that can be
downloaded to websites and provides up-to-date numbers on the financial
crisis and the bailout. The Financial Crisis Tracker shows unemployment
rates, housing foreclosure rates and the bailout total on a monthly
basis. It is a more accurate measure of how we are doing as a nation
than any Wall Street ticker.
Among the Key Findings
1) $4.6 TRILLION IN TAXPAYER FUNDS HAVE BEEN DISBURSED
Altogether, $4.6 trillion of taxpayer funds have been disbursed in
the form of direct loans to Wall Street companies and banks, purchases
of toxic assets, and support for the mortgage and mortgage-backed
securities markets through federal housing agencies. This is an
astonishing 32% of our GDP (2008) 130% of the federal budget (FY 2009).
2) TARP vs. Non-TARP FUNDING
Most accountings of the financial bailout focus on the Troubled Asset
Relief Program (TARP), enacted by Congress with the Emergency Economic
Stabilization Act of 2008. However, a complete analysis of the
activities of all the agencies involved in the bailout including the
FDIC, Federal Reserve and the Treasury reveals that TARP, which ended up
disbursing about $410 billion was less than a tenth of the total U.S.
government effort to contain the financial crisis. TARP funds only
account for about 20% of the maximum commitments made through the
bailout and less than 10% of the actual funds disbursed.
3) THE FEDERAL RESERVE HAS PLAYED THE PRIMARY ROLE IN THE BAILOUT
The Federal Reserve has provided by far the bulk of the funding for
the bailout in the form of loans - $3.8 trillion in total. Little
information has been disclosed about what collateral taxpayers have
received in return for many of these loans. Bloomberg News is suing the
Federal Reserve to make this information public. On March 19, 2010
Bloomberg won its suit in the 2nd Circuit Court of Appeals, but it is
not clear if this case will continue to be litigated to the Supreme
4) FEDERAL SUPPORT FOR THE HOUSING MARKET IS ON THE RISE
A key component of the bailout has been the federal support for
mortgages and mortgage-backed securities, primarily through the Federal
Reserve. Altogether, the government has disbursed more than $1.5
trillion in non-TARP funds to directly support the mortgage and housing
market since 2007.