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Fed Loaned GE, JPMorgan, GSachs Billions

Discreetly tucked away in the ‘Economy’ section of the New York Times:

G.E. and JPMorgan Got Lots of Fed Help in ’08

By SEWELL CHAN and JO CRAVEN McGINTY
December 5, 2010

Newly disclosed records show that during the 2008 financial crisis, the Federal Reserve essentially lent $16.1 billion to General Electric by buying short-term corporate i.o.u.’s from the company at a time when the public market for such debt had nearly frozen.

And on Sept. 15, 2008, the day Lehman Brothers filed for bankruptcy protection, JPMorgan Chase received a $3 billion loan from the Fed. The loan was extended under one of several Fed programs tapped by the Wall Street bank, one of the more robust financial institutions to weather the crisis.

The two companies received help even as their chief executives, Jeffrey R. Immelt of G.E. and Jamie Dimon of JPMorgan, sat on the nine-member board of the Federal Reserve Bank of New York

What a coincidence.

By the way, remember how everyone marveled at how GE and JPMorgan/Chase emerged supposedly unscathed from the ‘financial crises’? Now we know why.

Also by the way, both GE and JP were among the top contributors to Mr. Obama’ Presidential campaign. With JPM/Chase having ponied up $700,000 and GE $500,000. (Not counting GE’s ‘contributions in kind,’ via their television programming.)

The details of the emergency loan program were disclosed last week when the Fed reluctantly released records of 21,000 crisis-related transactions under orders from Congress. The disclosures are likely to renew questions about the influence of bank officers and corporate executives in the operations of the Fed.

Not really, since these are staunch Democrats. Mind you, if these loans had gone to fat cat Republicans The Times would have put this story on the front page above the fold and it would lead off every network news program for weeks.

“It’s ugly,” said Allan H. Meltzer, an economist at Carnegie Mellon University and a historian of the Fed. “It has the appearance of impropriety.”

But just "the appearance."

In a statement, the New York Fed said that its “board of directors was not involved in the creation of the emergency lending facilities authorized by the board of governors of the Federal Reserve.”

But they did have the final say in who got what loans, did they not?

The Fed says it has been, or will be, repaid on all of its loans

Oh, well then. After all, it’s not much of an advantage to be given an interest free billion dollar loan in the middle of a financial crisis.

JPMorgan went on to purchase Bear Stearns and (the Democrat fat cats bank) Washington Mutual.

The new disclosures do not represent the first time the New York Fed’s relationship with the banks it assisted has come under scrutiny.

Goldman, previously an investment bank, became a Fed-regulated bank holding company during the crisis. It tapped the Fed program to help investment banks 52 times, owing $18 billion to the Fed at one point — receiving far greater support than JPMorgan.

The chairman of the New York Fed at the time, Stephen Friedman, was a Goldman director and former chairman of Goldman. The Fed granted Mr. Friedman a waiver so he could continue serving as chairman of the New York Fed.

While awaiting the waiver, Mr. Friedman bought shares of Goldman around the time the bank received Fed support. After The Wall Street Journal reported on the purchases, Mr. Friedman stepped down, saying the Fed “does not need this distraction.” The New York Fed’s top lawyer said at the time that Mr. Friedman “did not violate any Federal Reserve statute, rule or policy.”

No, of course not. Who would think such a thing?

Oh, by the way, Goldman Sachs was Mr. Obama’s second biggest contributor, giving him a million dollars in campaign contributions.

Mr. Friedman’s successor as chairman of the New York Fed was Denis M. Hughes, president of the New York State A.F.L.-C.I.O. Fed observers say it is unlikely that a former banker will serve as the agency’s chairman any time soon.

Whew, what a relief to see a president of the the AFL-CIO in charge of the fed now. That will stop any special favors going to Democrat party cronies.

This article was posted by Steve on Monday, December 6th, 2010. Comments are currently closed.

4 Responses to “Fed Loaned GE, JPMorgan, GSachs Billions”

  1. GetBackJack says:

    I used to be something of a tax protestor because I’d read Law at several universities and had considered Law as a possible avocation. But having read the damn thing for myself and contrasting the idea of a separate Court and separate Judges for ‘taxation offenses’ against the Constitution as written, I admit to getting pretty riled up.

    I followed cases, case law, Opinions, read and studied Precedents and argued positions. Yet, Tax Courts kept slamming people in prison year after year. I couldn’t figure it out. Until ….

    …. until the day I finally really, truly realized It’s Their Money. The privately owned, privately administered Federal Reserve and their notes really are private property lent into circulation as the currency We The People are using in place of our lawful currency. The ledgerdemain that makes this possible is simple …. Contract Law. Just as our terrorist enemies are using our freedom against as a weapon, our financial enemies use Contract Law against us because if there’s two things the Constitution protects more than anything else it’s Contract and Property (equity).

    Using their money is a de facto de jure contract. Use their money, you have to abide by the rules of their Contract. Break the provisions of that Contract and you suffer the fate of breaking Contract. Their money. Their rules.

    May sound a bit complicated but its actually stunningly simple.

    And I say all that to say this –

    FED LOANED GE, JPMORGAN, GSA CHS BILLIONS?

    Can’t do a thing about it.

    IT’S THEIR MONEY. THEIR RULES. You and I have no say in it whatsoever. It would be like me telling my neighbor he can’t give his money to his son. Get this into your thinking … it’s their money. They can do with it whatever they choose. You have no say in the matter whatsoever.

  2. Right of the People says:

    “Mr. Friedman’s successor as chairman of the New York Fed was Denis M. Hughes, president of the New York State A.F.L.-C.I.O. Fed observers say it is unlikely that a former banker will serve as the agency’s chairman any time soon.”

    I can see their point, why would you want to have someone in charge that actually knows a little about the business? I mean we have a boy sitting in the White House that has no experience in the real world and he’s doing such a bang up job. Right? (sarc back off)

    Once we get rid of Barry the Impotent we need to think about going back on the gold standard.

    • GetBackJack says:

      As I said above, it’s their money so it;s their rules. If you try to make it make sense in terms of rationality and pure mathematics, you’ll drive yourself crazy. Their money. Their Game.

  3. proreason says:

    Yet they wouldn’t reduce my mortgage payments by a eighth interest point in 2009 even though I’ve made about 600 mortgage payments in my life (at rates up to 11% p.a.) without one late payment (counting multiple rental properties).

    Of course, I’m whiter than white, and didn’t faint at any Obamy concerts.

    I guess I should be thankful they didn’t increase the interest.


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