In the Dec. 7 edition of Boise Weekly, columnist Ted Rall wrote about a report Bloomberg Markets Magazine published Nov. 28 that asserts the Federal Reserve secretly loaned $7.77 trillion to banks (BW, Opinion, "7-7-7," Dec. 7, 2011). From the original report: "A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest 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."
Since the story's publication, the Fed sent a letter to Congress saying that recent media reports of secret loans were untrue, then Bloomberg fired back, defending its reporting and "showing its work," so to speak. It's an interesting, yet complicated, story to follow and at least one BW reader would agree with that assessment.
Last week, a reader stopped by with a copy of a Washington Post op-ed slamming Bloomberg for the original report, saying it was sensationalized and quoting economists and columnists who called it a lie. Bloomberg stands by its reporting, and since Rall wrote a column about the $7.77 trillion, I asked him to comment on the brouhaha:
"So it now seems that the $7.77 trillion was in loan guarantees. To which I wonder, what if the Fed had issued $7.77 trillion in loan guarantees to the unemployed and distressed homeowners? My guess is that it would have kept them afloat. Credit isn't the same as cash--but you can use it to get cash. In the final analysis, it's a distinction without a difference."
The best blow-by-blow account I've seen of the story as it has unfolded was published by the Atlantic Wire. For an overview of the Bloomberg-Fed tit for tat, plus Jon Stewart's take on the whole thing and Bloomberg TV's follow-up coverage, visit http://theatlanticwire.com/business">theatlanticwire.com/business.
And now for something completely different: the ridiculousness that is this week's main feature. Needless to say, it's quite the alternative take on the holidays. We hope you get a laugh out of it.
Have a happy holiday--whichever holiday it is you choose to celebrate.