(Image source: Flickr)

 

BY CHRISTINA HARTMAN


It was a behemoth bank bailout that had pundits pretty peeved.

FOX BUSINESS: “Like thieves in the night, big banks walked away with trillions of dollars of emergency secret loans.”

CNN: “It was your taxpayer money, but you never even knew about it.”

DAILY SHOW: “Basically the government was lending banks money at no interest, and then borrowing it back from the banks at interest.”

A Bloomberg News investigation in late November pointed to $13 billion big banks reaped in profits from a series of alleged secret loans made by the Federal Reserve in 2008, at the height of the financial crisis.

But now, CNBC reports, Fed Chairman Ben Bernanke is hitting back.

“He says articles out over the past month contain egregious errors and mistakes. Those articles allege that there was secret emergency loans to banks during the financial crisis, something Mr. Bernanke says is flat-out wrong.”

That -- from a letter to lawmakers in which Bernanke said the reported $7 trillion in secret loans was actually only $1.5 trillion. And he says -- those loans weren’t a secret. Not only that, Forbes reports, Bernanke says the loans were a good deal for taxpayers, saying they...


“...generated $20 billion in interest income for the Treasury Department and that the Fed has returned $125 billion to taxpayers from operations that include the facilities, [and he] also stresses that the lending supported businesses with few ties to Wall Street.”

Bernanke says Bloomberg -- essentially -- did some poor math in adding up a series of loans detailed in documents obtained from a Freedom of Information Act request. Marketwatch gives this analogy:

“...if a family received a $200,000 mortgage loan and then refinanced it, again borrowing $200,000, it would be misleading to say that the family had borrowed $400,000...”         

But The Wall Street Journal says -- the Fed’s been pretty secretive in the past, and that $1.5 trillion IS a lot of cash. Still the Journal concedes, it’s easy -- but not okay -- to get carried away in reporting about the Fed.

“Blame the law of large numbers and the delight we all take in revealing and learning secrets... [W]idespread misunderstanding of what the Fed does and actually did can cripple it from taking steps to protect the economy in a future crisis. … There’s plenty to argue about, without turning to inflated numbers. The actual facts are stark enough.”

In a statement Bloomberg says it stands by its reporting.

 

Bernanke: There Were No 'Secret Loans'

by Christina Hartman
0
Transcript
Dec 7, 2011

Bernanke: There Were No 'Secret Loans'

(Image source: Flickr)

 

BY CHRISTINA HARTMAN


It was a behemoth bank bailout that had pundits pretty peeved.

FOX BUSINESS: “Like thieves in the night, big banks walked away with trillions of dollars of emergency secret loans.”

CNN: “It was your taxpayer money, but you never even knew about it.”

DAILY SHOW: “Basically the government was lending banks money at no interest, and then borrowing it back from the banks at interest.”

A Bloomberg News investigation in late November pointed to $13 billion big banks reaped in profits from a series of alleged secret loans made by the Federal Reserve in 2008, at the height of the financial crisis.

But now, CNBC reports, Fed Chairman Ben Bernanke is hitting back.

“He says articles out over the past month contain egregious errors and mistakes. Those articles allege that there was secret emergency loans to banks during the financial crisis, something Mr. Bernanke says is flat-out wrong.”

That -- from a letter to lawmakers in which Bernanke said the reported $7 trillion in secret loans was actually only $1.5 trillion. And he says -- those loans weren’t a secret. Not only that, Forbes reports, Bernanke says the loans were a good deal for taxpayers, saying they...


“...generated $20 billion in interest income for the Treasury Department and that the Fed has returned $125 billion to taxpayers from operations that include the facilities, [and he] also stresses that the lending supported businesses with few ties to Wall Street.”

Bernanke says Bloomberg -- essentially -- did some poor math in adding up a series of loans detailed in documents obtained from a Freedom of Information Act request. Marketwatch gives this analogy:

“...if a family received a $200,000 mortgage loan and then refinanced it, again borrowing $200,000, it would be misleading to say that the family had borrowed $400,000...”         

But The Wall Street Journal says -- the Fed’s been pretty secretive in the past, and that $1.5 trillion IS a lot of cash. Still the Journal concedes, it’s easy -- but not okay -- to get carried away in reporting about the Fed.

“Blame the law of large numbers and the delight we all take in revealing and learning secrets... [W]idespread misunderstanding of what the Fed does and actually did can cripple it from taking steps to protect the economy in a future crisis. … There’s plenty to argue about, without turning to inflated numbers. The actual facts are stark enough.”

In a statement Bloomberg says it stands by its reporting.

 

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