Socialism for the Rich
December 6, 2010
The Federal Reserve loaned $16.1 billion to General Electric and $3 billion to JPMorgan Chase during the 2008 financial crisis, even as Jeffrey R. Immelt of G.E. and Jamie Dimon of JPMorgan sat on the Federal Reserve Bank of New York board of directors. "It is an obvious conflict of interest," Sen. Bernie Sanders said on Sunday. Sanders wrote the amendment to the Wall Street reform law that required the Fed to disclose some 21,000 transactions involving more than $3.3 trillion during the financial crisis. Fed Chairman Ben Bernanke tried to keep the information secret. "It appears that we are very much a country in which we practice socialism for the rich and rugged capitalism for everyone else," Sanders said.
"In my view," the senator added, "there is an obvious conflict of interest when CEOs of banks and large corporations who serve on the Fed's Board of Directors receive cheap loans from the Fed. While Wall Street banks got a huge amount of government support, small businesses went bankrupt because they couldn't find affordable credit, workers were losing their homes to foreclosure and consumers were being charged 25-30 percent interest rates on their credit cards by the very same banks that the Fed bailed out. Investigating these conflicts of interest is a central part of the GAO audit that I included in the Financial Reform bill. That report should be out by July. I hope and expect that it will lead to major reforms as to how the Fed functions."
To read The New York Times article on Fed loans to GE and JP Morgan while the heads of those firms were Fed board members, click here.
To read a letter from Sanders to Fed Chairman Ben Bernanke questioning those and other transactions, click here.