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‘Gold in sacks’

July 15, 2009 - Jim Anderson
Politicians issue many press releases.

Some go ignored, some get lots of attention. Some get lost between yawns and celebrity gossip.

Sen. Bernie Sanders (I-Vt.) today issued a press release concerning the Federal Reserve and Goldman Sachs.

It won’t make the lead story on the network news. It might get scant mention on a cable show or two — not necessarily favorable. Sanders is a self-described democratic socialist.

It’s a complicated story, but not that complicated. It’s about the ongoing raid on your wallet by Wall Street.

Sanders is asking whether some of more than $2.2 trillion in secret subsidies issued by the Federal Reserve went to Goldman Sachs and other bailed-out banks that now plan to shower executives with bonuses.

Goldman Sachs is reporting second-quarter income of $3.44 billion. The investment bank reportedly plans to pay as much as $20 billion this year in bonuses and other compensation, about $700,000 per employee.

“The turnaround came less than a year after reckless investments by Goldman and other Wall Street firms triggered a worldwide recession and drove many rivals out of business,” Sanders said.

Last year, Goldman received a $10 billion direct bailout that’s now being repaid, clearing the way for bonuses. But that’s only part of the story.

At, Robert Scheer points out that Goldman was also a prime beneficiary of the AIG bailout.

“Much is now made of Goldman paying back part of its bailout money, but forgotten is the $12.9 billion that Goldman got as its cut of the $180 billion AIG payoff,” Scheer writes. “That is money that will not be paid back.”

Sen. Sanders, meanwhile, is concerned that taxpayers may be on the hook for an even bigger Goldman bonanza.

“The question I have is how do we know that right after Goldman and other banks pay back billions to the Treasury, the Federal Reserve doesn’t turn around and provide them with billions more with no strings attached?” Sanders asked. “The answer is that we don’t know. (Fed Chairman) Ben Bernanke refuses to say.”

Sanders argues that any firm that received a taxpayer bailout through the Troubled Asset Relief Program or the Federal Reserve should be subject to strict limits on compensation and should not be rewarding bonuses to senior executives.

Sanders is the chief sponsor of legislation to require the Fed to name the financial institutions that have received what could total more than $7 trillion in loans and loan guarantees.

A separate Sanders bill would require the Government Accountability Office to conduct an independent audit of the Federal Reserve. It now has 13 cosponsors, including Sens. Russ Feingold (D-Wis.), John McCain (R-Ariz), Blance Lincoln (D-Ark.) and John Barrasso (R-Wy.). Rep. Ron Paul (R-Texas) has introduced an identical bill in the House. It now has 261 cosponsors, including 85 Democrats.

“Chairman Bernanke and the Federal Reserve have got to understand that this money does not belong to the Federal Reserve. It belongs to the American people,” Sanders said. “As long as the Federal Reserve is allowed to keep the information on their loans secret, we will never know the true financial condition of the banking system.”

We do, however, have a clue about the financial condition of the Goldman Sachs executives. They’re getting richer, thanks in no small part to the taxpayer’s dime.


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