"That's Counterproductive."

Transparency, that is.  So what's "productive," in Bernanke's view?  Keep it murky. 

The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in. [...]

“Some have asked us to reveal the names of the banks that are borrowing, how much they are borrowing, what collateral they are posting,” Bernanke said Nov. 18 to the House Financial Services Committee. “We think that’s counterproductive.”

Bloomberg adds the real value of the bailout up to $7.7 trillion.

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages. [...]

“This is the worst capital markets crisis in modern history,” [said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. and a former economist at the New York Fed]. “So you have the biggest intervention in modern history.”

Playing the quaint-seeming heroic role of the free press, the intrepid business and finance reporters of Bloomberg News Service are determined to penetrate the murk. 

Bloomberg has requested details of Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral.

Comments

[realpc]

The government is devouring more and more of the economic system, which could eventually make it all-powerful. How can any individual or group oppose a government that owns everything?

I realize this sounds paranoid, but I think these bailouts are doing more than wasting our tax money and rewarding scoundrels and crooks. I think they are turning the US government into an out-of-control monster.

It might seem like we could still have a democracy after the central government owns everything, since we might still be allowed to vote -- but they could vote in the Soviet Union. It's just that only one party was on the ballot.

When Lehman failed that triggered the crisis, supposedly, but there is a difference between triggering and causing. Maybe the crisis would have happened even if they had rescued Lehman. We don't know. But now they assume it was caused by Lehman failing and therefore every failing bank must be rescued.

Maybe Bernanke and Paulson honestly believe in what they are doing. Or maybe they just feel a need to do something, or to seem like they are doing something. But the truth, probably, is that they really don't know if bailouts will be helpful or harmful in the long run.

And the government will never give back anything it has devoured. A relatively separate economic system is the foundation of a free democracy. Of course it can't be completely separate. But an almost complete merge is not compatible with freedom.

Suppose the government owns all the banks and you want a loan to start a business, and the government does not approve of your business idea. Normally you would go to a competing bank, but there wouldn't be any. So the government decides what businesses will exist. And doesn't that mean it will decide everything?

Won't the government be in a position to reward and punish at its whim? Things that are supposed to be decided as the result of conflict and competition will be decided by the authority of rulers.

I think we are on the path to fascism.

[Ron]

First off, wow, how cheap was that war, eh? Barely a dent in the Citi balance sheet! :0

Second, let me use my Mystic Claw and reach into my great-great-great grandchilds College Fund, (you know, he's lucky to get into the University of Wal-Mart!) and....there! Here ya go! I'm squared up! Next!

[Ron]

So that's...the GDP of Japan and Germany...combined.