The Government Accountability Office (GAO) conducted its first comprehensive audit of the Federal Reserve, revealing some startling facts concerning the lending practices of America’s central bank. Here are just a few highlights as pointed out by Vermont Senator Bernie Sanders.
- Provision of over $16 trillion in financial assistance in the form of bailouts to domestic and foreign banks and businesses
- Inability or refusal to adequately deal with and mitigate conflicts of interest:
“For example, the CEO of JP Morgan Chase served on the New York Fed‘s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.”
- Outsourcing of loan operations to private, third-party vendors who were themselves recipients of special low-interest-rate loans:
“The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.”
To read the full report, click here. Also, a more comprehensive report is due in October of this year.