Largest bailout in US kept a secret

http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html

Rather long and pretty frightening article, give the financial industry a finger and they take the whole hand.

Just a few items:

• The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion (1.200.000.000.000) on Dec. 5, 2008, their single neediest day.
• Banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.
• Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed.
• Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system
• Bernanke in an April 2009 speech said that the Fed provided emergency loans only to “sound institutions,” even though its internal assessments described at least one of the biggest borrowers, Citigroup, as “marginal.”
• Lawmakers knew none of this. They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages.
• The perceived safety net creates what economists call moral hazard -- the belief that bankers will take greater risks because they’ll enjoy any profits while shifting losses to taxpayers.
• “The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.”
• “The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”