Below is a letter I wrote to my Representative asking for his help.
I am writing to ask you to look into ways to limit the current FED program to guarantee bad assets currently held by US banks, and to demand that the FED submit to a full accounting of such guarantees already issued by the FED.
The February 10th NY Times Article titled "Geithner said to have prevailed on U.S. bailout" includes the following passage,
It intends to call for the creation of a joint Treasury and Federal Reserve program, at an initial cost of $250 billion to $500 billion, to encourage investors to acquire soured mortgage-related assets from banks.
It wants the Fed will use its balance sheet to provide the financing, and the Federal Deposit Insurance Corp. might provide guarantees to investors who participate in the program, which some people might call a 'bad bank.'
A second component of the plan would broadly expand, to $500 billion to $1 trillion, an existing $200 billion program run by the Federal Reserve to try to unfreeze the market for commercial, student, auto and credit card loans. A third component would involve a review of the capital levels of all banks, including projections of future losses, to determine how much additional capital each bank should receive.
The capital injections would come out of the remaining $350 billion in the Troubled Asset Relief Program, or TARP.
Lets look at the math 500 Billion + 1000 Billion - 200 Billion = 1300 Billion. Yet the last sentence quoted above says the initial cash for this will come of TARP's 350 Billion. Where is the other 950 Billion coming from?
Today's Washington Post, in an article titled "New Bailout May Top $1.5 Trillion" included this paragraph,
In announcing the plan, Treasury Secretary Timothy F. Geithner will not ask Congress for more funds than the roughly $350 billion that remain in the Treasury Department's original rescue package for the financial system, though congressional sources said such a request could come later if the new programs are unsuccessful. The rest of the money would come from other government agencies, such as the Federal Reserve, as well as private-sector contributions.
The private sector contributions are a joke, and should be an insult to the intelligence of anybody who has been paying attention for the last twenty years. Private contributions to the Federal Government are made either purchasing bonds, which is really a loan to the Government, or paying taxes which wealthy people have systematically worked to reduce their obligations for years. Are we supposed to believe they have suddenly had a change of heart. Give me a break.
Which means that the FED is going to hand out close to another Trillion dollars to the banks. Is there anyway that we, the American public or the Congress for that matter, can see where that money goes and how it used by the recipients.
Bob Riech, in a post on TPM Cafe, dated January 24, 2009, titled "How America Embraced Lemon Socialism" claims,
While Washington debates TARP II, the Federal Reserve Board continues to buy or guarantee or provide loans for a vast and growing pile of questionable financial and corporate assets, much of which are likely to be worth far less than the Fed has paid or guaranteed or accepted as collateral. We're talking big money here -- so far over $2.4 trillion.
If Mr. Riech is correct we the American taxpayer will be on the hook for 3.4 Trillion dollars for FED expenditures alone. Yet you have no oversight over, or even leverage to cap, the FED's expenditures. The Senate is arguing over peanuts, 100 Billion used to be more than peanuts, while the bankers are robbing us blind out the back door.
Please tell me what you are doing to try to reign in this outrageous theft. (Note: I am not talking about the stimulus plan. I am talking about TARP and this little discussed and unauthorized program that the FED is currently implementing). If we are going to give, and I do mean give, as in handout (i.e.: welfare for wealthy people), Trillions of dollars to people who cannot live on less the 500 hundred thousand dollars a year, then it should be done above board. Please insist that it be done in a way that all Americans can clearly can see who aided these scoundrels in this crime.