AlterNet: 5 Ways the Government Used Our Money to Save Big Banks and Screw Us
which would bring the full amount of capital injections and direct loans to $2.4 trillion.
Indirect Loans and Guarantees
The Hazzards come back and claim that wasn't enough; they're still screwed. So the bank says,"We can give you some more short-term, thirty-day loans to get you through (even longer-termones if that doesn't work), but you have to post collateral. It doesn't have to be very valuable:your old bicycles in the garage, your basement sofa-bed, maybe that baseball card collectionyou planned to use to pay for your kids' college educations. And if you still need more at theend of the thirty days, you can post some more junk from your attic as collateral."This more or less corresponds to the newly established Federal Reserve facilities (think: creditunions for banks), which provide money to banks in exchange for various assets as collateral.Both the Federal Reserve and the Federal Reserve Bank of New York administer thesefacilities. They run the gamut from the $1.8 trillion Commercial Paper Funding Facility, createdto provide more credit for households and businesses (which, to be fair, did help calm themarkets; but it didn't get to households or to most small businesses), to the $540 billion MoneyMarket Investor Funding Facility, created to back private funds owned by banks, insurancecompanies or investment advisory companies.Joe comes back again to Bailout Bank and says that he's still short, but he has a proposal. "I'mnot going to ask you for any more loans. Promise. Instead, I'm going to see if someone else willlend me money. The problem is, I'm such a terrible credit risk I need someone to back me up.Maybe instead of me asking for a loan, I could kind of use your name to ask?" That's the rolethe FDIC played for Goldman Sachs and other firms, which took advantage of $940 billion inFDIC guarantees to raise cheap money for themselves and another $684 billion of backing fortheir trading accounts as an additional perk.All in all, these kinds of guarantees, along with the indirect collateral loans for the bankingindustry, total $6.7 trillion, and there is precious little transparency coming from the Fedregarding most of it. In fact, Ben Bernanke told Congress in November that too muchtransparency about which banks got which loans and for what collateral would be"counterproductive."
General Backing and Subsidization
Bailout Bank isn't done helping the Hazzards. It turns out that the couple also has a vacationcondo that's lost some value. As part of propping up their balance sheet, the Bailout Bank promises to guarantee the price of the condo. In other words, if Joe and Katie are forced to sellthe condo for less than its value before the housing crisis, the Bailout Bank will write them a