Remember when Ron Paul was almost the only politician in Washington calling for auditing the Fed? After this latest revelation, one can see what good sense he had in doing so.
Co-blogger Arnold Kling has already highlightedthis, but it didn't attract many comments. But this has to be one of the scandals of the decade. Here's one excerpt from the Bloomberg story:
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he "wasn't aware of the magnitude." It dwarfed the Treasury Department's better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.
The Fed didn't tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn't mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed's below-market rates, Bloomberg Markets magazine reports in its January issue.
Once again, comedian Jon Stewart does a better job of this than most of the mainstream media.
HT to Jeff Hummel.
Update: My original post above was misleading. This post by Felix Salmon explains why. HT to commenter Parag.