Wouldn’t Be Prudent

by digby

There’s a lot of jockeying about what to do with the unspent portion of the TARP bailout and even more jockeying about how much to spent on a new stimulus package. But nobody’s talking about the huge sums of money the Federal Reserve has been loaning to banks and other entities around the world since the financial crisis hit.

Yesterday, Blue America congressman Alan Grayson actually asked Vice Chairman of the Fed Donald Kohn where the money is going. And you won’t believe the answer he got:

Apparently, it wouldn’t be prudent for the American taxpayers to know where these trillions are going. The man simply refused to answer.

For a primer on what this is all about, go here. This is actually a big deal and the stakes are huge:

The bottom line is that Bernanke has made a gamble with something approaching 2 trillion. If the gamble wins, taxpayers owe nothing. If the gamble loses, taxpayers are committed to borrow a sum equal to any losses and start making interest payments on it.

The sum we’re talking about is more than the amount that the CBO cited last week as the impending federal deficit — and which caused a group faint among the villagers. But nobody’s talking about this except a progressive freshman congressman from Florida.
There are more hearings scheduled and Chariman Frank’s ears certainly seemed to perk when the vice chairman declined to say where the money was going and couldn’t give a good reason why so I expect this isn’t the last we’ll hear of it.
Just how much are we on the hook here? And for whom?.