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The Fed Finally Reveals the Full Story Behind The Recession And Bail Out

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Posted by Adam English on the Wealth Wire
Although we’re years beyond the start of the recession, we just got front-row seat to exactly what was going on within the Federal Reserve.

While the Fed has been more transparent over the last several years than in the past, mostly due to the controversial methods it has employed, the actual transcripts of meetings are released on a five year delay.

Earlier today, the full transcripts of the eight scheduled meetings and three emergency sessions in 2007 were posted to the Federal Reserve’s web site.

Some 513 pages of transcript documents were previously released in March 2012 from meetings in 2007 through 2010, but they were heavily censored and virtually any useful information was kept off-limits. Nothing covering the economy or policy discussions was included.

While there have been a copious number of postmortem reports and plenty of analysis across the entire spectrum of media, this is our first official glimpse into deliberations during the early stages of the crisis.

The documents will allow us to gain a better understanding of what Ben Bernanke and the Fed board knew, when it knew it and how it came to take such unorthodox actions that have become the template for central banks worldwide.

Ben Bernanke

Credit: Wikipedia

Of particular interest will be the discussions of the subprime mortgage market that crashed shortly after Bernanke testified that, “Problems in the subprime mortgage market seem likely to be contained.” 

Another topic to follow will be the extraordinary efforts to prop up banks. In the early stages of the crisis, Fed officials tried to separate the problems emerging in the global banking system from the risks to the U.S. economy.

On Aug. 17, 2007, a huge cut in the “discount rate” of emergency lending to banks was enacted to try to isolate developing problems in bank funding markets. By December, the Fed was pumping billions into the banking system through the “Term Auction Facility,” which greatly reduced the rate and acceptable collateral for 28 and 84 day short-term loans.

The discussions regarding the bank bailout schemes should show serious dissent within the board meetings over what to do as banks came dangerously close to insolvency.

At the time, Timothy Geithner was the New York Fed president. In that position, he led the charge for the bank bailout efforts against other board members. Richmond Fed president Jeffrey Lacker in particular is known to have resisted the extreme intervention measures and wanted to let the markets sort out the consequences for the reckless actions of banks and financial institutions. 

The full transcripts are available on the Fed’s web site here.

More on the Wealth Wire

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    Total 6 comments
    • JD

      This was news before it was news on Before it’s News

    • Mayhem

      Whats the difference between a recession and a depression?

      A recession is when your neighbor loses his job. A depression is when you lose your job.

      Let us not distract from the truth. A much needed correction is underway.

    • Anonymous

      Every time there is one of these ‘economic downturns’ it is because of government meddling in the economy. The power to print money must be removed from the hands of politicians and a return to a gold/silver standard that can’t be ‘printed out of thin air’.

      And PLEASE don’t tell me the ‘fed’ is a private bank. The government prints the money folks, THEY are the problem.

      • Anonymous

        It is a private bank. The only difference is that it gets a chairman appointed by the President, and it has unfair control over other banks. It also gets money printed by the treasury at paper cost,which it then lends to the other banks at interest. It also lends the Federal government money at interest.The Secretary of Treasury is not a paying job anymore, so who do you think he works for? If we took the Federal Reserve out of the picture,there would be no money for the Federal government to borrow at interest,thus they would have to live within their means or borrow from another country. That would not be very popular. That is what the Fed does it is a smokescreen to confuse people into thinking that something else is going on. Most people think that the Federal Reserve is part of the Federal government when it is just a large bloated parasite on America’s neck.

    • Anonymous

      Of course, everyone knows a “correction” will happen but how?

      One could have immediate default. They lose their shirts entirely and immediately or……default over 15 years, still everyone loses their shirt but……thread by thread (inflation)

      The second is preferred. It allows time for the vested interests and the smart money to aquire the necessary protection, ie transfer the paper to the masses and the real world assets to the few.

      Hold on to your real world stuff and keep enough paper to transact.

    • Banderman

      Yep, they told the lie, the whole lie, and nothing but the lie.

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