11/13/2008

Why Won't the Federal Reserve Say Who They Gave $2 Trillion To?

Bloomberg: The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system.Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return. "The collateral is not being adequately disclosed, and that's a big problem," said Dan Fuss, vice chairman of Boston-based Loomis Sayles & Co., where he co-manages $17 billion in bonds.The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression. "It's your money; it's not the Fed's money," said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. "Of course there should be transparency."

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