Federal Reserve crisis lending quietly enlarged the biggest banks at taxpayer expense

Evidence

While Fed officials trot out the highly misleading assertion that almost all of the government loans were subsequently repaid and there have been no losses to the public purse, closer scrutiny of the details suggest taxpayers paid a price far beyond the publicly provided numbers (such as the TARP), as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger. The Fed has bestowed upon the banks seemingly permanent options to reward executives and shareholders by capping the downside while permitting an unlimited upside. Over the course of the crisis the Fed made loans of over $7 trillion to financial institutions at negligible rates of interest, with no quid pro quo. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 508

Categorization

• XREF: Connects to the broader ‘thought collective’ thread of the book — Fed officials as acolytes of Friedmanite orthodoxy, the same cast as in earlier chapters on Chicago economics. — connects to: The Federal Reserve acted subservient to banks while posing as a regulator — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 2082; Too-big-to-fail bank concentration worsened after the 2008 crisis — Wendy Brown, Undoing the Demos: Neoliberalism’s…, 736; The Fed’s COVID-era policies shifted public resources to large corporate capital holders. — Clara E. Mattei, Escape from Capitalism: An Intervention, 377 (+1 more)

Broader Connections

• Too-big-to-fail bank concentration worsened after the 2008 crisis #corroborates (0.85) — Wendy Brown, Undoing the Demos, 736
• The Fed’s COVID-era policies shifted public resources to large corporate capital holders. #expands (0.80) — Clara E. Mattei, Escape from Capitalism, 377
• Bailout rhetoric reframed banker rescue as compelled public-interest stimulus #expands (0.75) — Yanis Varoufakis, Technofeudalism, 932