Wall Street $7.8 Trillion, Main Street Not So Much
Well, well, well. The news is out this week—the government was way, WAY more over-the-top in rescuing Wall Street than anyone had let on. The Federal Reserve handed out $7.77 trillion by March 2009, if you include guarantees and lending limits. The problem with this is not actually the money (we got it back) but that it propped up a disastrously broken system:
"Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse…taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger."
This analysis is not from Occupy Wall Street: It’s from those long-haired, hippie radicals over at Bloomberg News, whose Freedom of Information Act lawsuit finally pried the bailout details out of the unwilling Fed. Turns out the banks made $13 billion in profits off the government’s sweetheart-deal interest rates, which New Deal 2.0 is calling maybe “the biggest subprime loan operation of all time.”
The contrast couldn’t be clearer: While the government swung into extreme, double-secret action to save Wall Street, it’s sitting on its hands as long-term mass unemployment hammers Main Street. As a Mother Jones columnist puts it:
"… hoo boy, what a contrast with how the rest of us were treated. Things like principal write-downs, second waves of stimulus, aid to states, and mortgage cramdown all got a bit of idle chatter but were then left to die. For some reason, it would have been unfair to hand out money to profligate homeowners, state and local workers, and the millions who have been unemployed for more than a year."
Something’s unfair, all right.
Zab Palmberg is an associate editor of Sojourners.