Someone should fiscally restrain them

March 11, 2009 5:02 PM

Have the recipients of the $2 trillion dollars been identified yet? I know Bloomberg was attempting to find out where the Fed sent the money, but I haven't heard anything since.

Also, is there a legitimate reason why this information should be kept from the tax-payers who (at least partially) footed the bill?

posted by whatgorilla to work & money (3 answers total)

SNL thinks it could happen.

If it's not in the news yet, it's not known.
posted by filthy light thief at 6:11 PM on March 11, 2009

is there a legitimate reason why this information should be kept from the tax-payers

Yes, there are legitimate reasons for why this should be kept secret. Do those reasons outweigh potential losses taxpayers may face? Maybe, maybe not. But the week before Bear Stearns collapsed, 8 days following Chuck Schumer's claim that IndyMac was a failed bank, and WaMu's demise leading to Wachovia being thrust into Citi's, and the Wells', arms are examples of bank runs that regulators seek to avoid at all costs. Two (Bear and Wachovia) were counterparty bank runs. IndyMac was a depositor bank run. All three were the result of rumors, speculation, and conjecture.

Could you argue that all three were destined to fail? Knowing what we know now, probably. But knowing what we know now, almost every major bank in America is undercapitalized. The difference is: not every major bank in America is currently being threatened by a bank run. The Fed being too open and revealing now will create a massive amount of contagion, which would ultimately destroy the entire financial system. This is not an exageration. The way our current financial system is setup, it's subject to risks like the Black Death. One bad shock and the entire species (system) is destroyed. Why? Because every major bank in the world is in bed with other banks and counterparties. Wounding a major counterparty would cause investors to withdraw at exactly the same time (causing the destruction).
posted by SeizeTheDay at 6:22 PM on March 11, 2009 [4 favorites]

Perhaps the point is more that the government and equally many big businesses don't have to divulge much unless they want to. For both parties (mostly) the taxpayer is not a concern, either. Regulation and ownership is not democratizing/decentralizing right now; it's tightening up. The difficulty in attaining accurate and full information comes as a result of this, and I imagine we will see transparency dwindle for a while. Likely, we will never know where all of the money goes, and that is the price that Americans pay, whether they want to or not, when huge, nearly incomprehensible amounts of money that we don't have get flooded into the system.

So, yes, there's a reason you aren't getting information. Legitimate reason, though? I don't think so. I disagree with SeizeTheDay's remarks, because I think most of what we're going through is a recession, not the Great Depression 2. In fact, I think not having accurate and accessible information for the people when it comes to all of this will inevitably result in more corruption. More corruption, I think, will result in greater economic turmoil down the road.

Clearly some people "at the top" know where the money's going, and I don't doubt for a second that not having that information open to us, the people, affects how the distribution of it has gone and will go. People think it's corrupt now? Imagine having a failing business, getting a huge chunk of essentially free money, and not having to consult any of the people who would truly hold you accountable or judge if your business was worthy? It's absurd. If only we all got such free rides in life!

The people have a right to know which banks are failing and should, well, shut down because they're bad businesses. We should also know which of them are grabbing the government's overly-generous hand.
posted by metalheart at 7:02 PM on March 11, 2009 [1 favorite]