The information buried in the nearly 30,000 pages of documents the Supreme Court recently ordered the Federal Reserve to turn over regarding its loans at the height of the financial crisis keeps coming out, and it keeps looking worse.
The latest revelations come from Rolling Stone magazine, of all places. I know Rolling Stone leans Left. So ignore the commentary in the article, if you choose, and focus on the raw information. If it’s accurate, it ought to have everyone in the District of Columbia shaking fists in outrage and everyone who works on Wall Street slinking off in shame. But it won’t, because most of the people who run the government and our nation’s largest financial houses no doubt see nothing wrong.
Here’s an excerpt from “The Real Housewives of Wall Street: Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?”
“It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. ‘Our jaws are literally dropping as we’re reading this,’ says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. ‘Every one of these transactions is outrageous.’
“But if you want to get a true sense of what the ‘shadow budget’ is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall’s haul doesn’t seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn’t seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.
“Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley’s investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.
“The technical name of the program that Mack and Karches took advantage of is TALF, short for Term Asset-Backed Securities Loan Facility. But the federal aid they received actually falls under a broader category of bailout initiatives, designed and perfected by Federal Reserve chief Ben Bernanke and Treasury Secretary Timothy Geithner, called ‘giving already stinking rich people gobs of money for no fucking reason at all.’ If you want to learn how the shadow budget works, follow along. This is what welfare for the rich looks like.”