“The truth shall set you free.  But first it’s gonna piss you off.” – Dylan Ratigan

It’s understandable that we blog a lot about the budget fights in Congress, or the contents of Obama’s budget speech this week.  God knows it’s the only semi-serious subject on the the MSM’s radar.  Except among progressive bloggers, 'the crucial need for Deficit and Debt Control' as urgent right now has been written in stone already.  Even the Chairman of the Joint Chiefs has weighed in and called it ‘the most serious threat to our National Security’, though he forgets to point out that our defense budget has doubled over the past ten years.  (Hillary Clinton concurs.)

The squawking has been pretty out of control.  Tea Party Sweetie Paul Ryan’s draconian budget has been a gift to Obama; his cuts can look moderate in comparison.  Most Democrats seem not to even noticed that is his fantastic defense of Social Security, he actually said:

"That includes, by the way, our commitment to Social Security.  While Social Security is not the cause of our deficit, it faces real long-term challenges in a country that is growing older.  As I said in the State of the Union, both parties should work together now to strengthen Social Security for future generations.  But we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans' guaranteed retirement income to the whims of the stock market."  (my bold, his ass-covering)

So it was a nice speech, even good enough for Paul Krugman to like, and while all eyes are on this nice theater, it takes a goddam former sports writer for the Rolling Stone to ask, Why Isn’t Wall Street in Jail?, and now just up is The Real Housewives of Wall Street, Matt Taibbi gives us a glimpse into the Federal Reserve data dump that was compelled under Dodd-Frank, requiring the list of emergency loans the Fed gave out.  A two-year waiting period since the time of the loans was granted.

Most of the alphabet-soup program acronyms have slid under the radar for most of us: TALF, AMBSP, TAF, YADA, YADA… the list and the data dump are here; astounding reading, actually. 

 Taibbi:

“Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now pouring over 21,000 transactions and discovering a host of outrages and lunacies in the "other" budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."

 Obama, Geithner and the Ben Bernanke love to tell us how the TARP monies have been repaid, may even have  made money; they never mention the pensions that were ruined, the massive foreclosures from the fraud that brought down the economy, OR the secret loans and backstopping the Fed has been engaged in, totally literally of trillions more we now know about so far.

 Matt tells a bit of the story of two Morgan Stanley bankers; wives who were given nine loans of about $220 million over time under the TALF plan (Term Asset-backed Loan Facility).  Neither had any history in finance, and it might seem their only credentials were that they were married to the Chairman and President of the Investment Banking Division of Morgan Stanley.  One did, however, hold a degree in Reiki palm-healing; maybe that tipped the scales for Ben Bernanke; we’ll never know.

Now the program that actually funded The Housewives was invented by Geithner and Bernanke under a more general bailout category Matt calls “Giving already stinking rich people gobs of money for no reason at all’.  Has the ring of verisimilitude to it, doesn’t it?

In any event, the program went like this: The wives, Karch and Mack, invested about $15 million in ‘Waterfall TALF Opportunity’ and received $220 from the Fed with which they bought up a bunch of commercial mortgages from Credit Suisse, which Mack’s husband used to head.  Now the Fed valued those mortgages at about $254 million, but won’t say how they arrived at that figure, no notice about how many blocks of mortgages, or what they paid for each.  But as of last fall, $150 million of the $220 millions borrowed hadn’t been paid back.  And it’s conceivable that it never will be, and you and I and other taxpayers will pay for it.

WTF?  Why?  Because the low-interest loans were designed so that The Wives would keep the profits, and the Fed and Treasury (the taxpayers) would eat 90% of any losses.

 Matt says it all happened bit by bit: first money to save Bear Sterns, then AIG, then started rolling into the Fed buying up all the crap investments anyone claimed, citing that they were worried in investing in anything, since no one knew what was in the bundled securities, or what bank balance sheets looked like.  “Ack!  Give us money!’ seemed to have worked, depending on Who You Were in the scheme of things.

Now TALF was really designed after Obama was in office to free up money for loans.  Instead of lending directly to the consumers in debt, it was loaned to banks and hedge funds at almost zero interest.  That it didn’t free up money is a matter of history, but it gets worse as Matt reports:

“Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even.

This is the deal of a lifetime. Think about it: You borrow millions, buy a bunch of crap securities and stash them on the Fed's books. If the securities lose money, you leave them on the Fed's lap and the public eats the loss. But if they make money, you take them back, cash them in and repay the funds you borrowed from the Fed. "Remember that crazy guy in the commercials who ran around covered in dollar bills shouting, 'The government is giving out free money!' " says [former S & L bank investigator William] Black. "As crazy as he was, this is making it real."

Matt wants to know, as do we all, what sense it made for the Fed to bail out foreign auto makers while we’re bailing out GM and Chrysler?  Or  while borrowing money from ME nations at 3%, but give the Arab Banking Corporation of Bahrain $35 billion at a quarter of a point? 

“Even more disturbing, the major stakeholder in the Bahrain bank is none other than the Central Bank of Libya, which owns 59 percent of the operation. In fact, the Bahrain bank just received a special exemption from the U.S. Treasury to prevent its assets from being frozen in accord with economic sanctions. That's right: Muammar Qaddafi received more than 70 loans from the Federal Reserve, along with the Real Housewives of Wall Street.”

And meanwhile, only one or two low-level prosecutions of banking fraud or insider-trading have happened, and it looks as though the deal has been pretty much been struck with the State Attorneys General over the massive Fraud-closure Debacle; there will be some fines, but no one will go to jail.  And as Obama revs up his campaign solicitations, we can guess that money from Wall Street will be pouring in, and from all indications, the man isn’t one to take their money, smoke their cigars, and say, “Screw you.” 

Progressive bloggers all over the web are already talking about the next meltdown, and betting on Goldman Sucks: ‘will we bail them out?’  Hint: the big money’s on ‘Yes.’

So watch Inside Job, and think about all this as you listen to anyone natter on about your need to 'share in the sacrifice', and how the federal government's so poor they don't even mail you your goddam tax forms any more.

A fitting end to this diary is a quote from Jesse at Jesse's Café Américain:

I would like to believe, even now, that all the people throughout history, ordinary men and women, who have stood for liberty, sometimes against fearsome odds, and given their pain and even their lives, the last full measure of their devotion, for the idea of a free America, shall not have done so in vain, with their memory shamefully dishonored by their children.  That at some point the people will rouse themselves from their slumber, slow to act, but deliberate and unstoppable once they are stirred.  And then the real work of reform and rebuilding can begin.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.”

Wake up, America.  It’s a class war, and we’re losing in spades.

(cross-posted at My.firedoglake.com)