(NaturalNews) Americans were assured that congressional financial reform legislation passed in the wake of the 2008 credit and monetary crisis would end the concept of banks and financial institutions being "too big to fail", and thus, end any possibility of another massive taxpayer bailout if those same institutions overextended themselves again.
But not only has that legislation fallen short, some of the nation's biggest banks - the same ones that were bailed out because the elite in Washington and in the country's financial sector said not doing so would mean the end of the world as we know it - also reaped more than $13 billion in profits at the height of the financial crisis by taking advantage of historically low Federal Reserve loan rates spurred by the taxpayer-financed bailout.
According to a report in Bloomberg Markets Magazine, to be published in January, few Americans, until now, knew the details of the inner financial workings of these banks, in collusion with the Fed.
The report said that as of March 2009, the Fed had committed a staggering $7.7 trillion in funds to needy banks, or more than half of all U.S. gross domestic product that year. From 2007-2009, there were more than 21,000 transactions, and while the Fed says virtually all loans to the banks have been repaid without losses, "details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger."
The amount of money actually doled out by the Fed dwarfed the more well-known $700 billion taxpayer-funded Troubled Asset Relief Program, or TARP, which - as badly as it was opposed by a large section of the nation and members of Congress - at least "had some strings attached," Rep. Brad Miller, D-N.C., said. "With the Fed programs, there was nothing."
Perhaps the most disturbing aspect of the secret loans is that banks weren't required - and did not disclose - the amount of money they were borrowing. So for shareholders and clients alike, there was never any indication that these banks were in as deep as they were, that their losses and liabilities had amounted to as much as they did. But hey - at least the secrecy was bipartisan. The report said that it also extended to the administration of George W. Bush.
And the numbers are simply staggering. The six largest banks - JPMorgan, Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs Group, Inc., and Morgan Stanley - received $160 billion from TARP, but they borrowed an additional $460 billion from the Fed.
Economists and financial industry analysts said the government's emergency response likely saved the industry from collapse, but they add that the situation should never have gotten so bad to begin with.
After the fact, a number of lawmakers - including former Republican Sen. Judd Gregg of New Hampshire and Rep. Barney Frank, D-Mass., who helped craft the Frank-Dodd financial reform legislation, said they had no idea banks were in that bad of shape and were borrowing that much from the Fed.
But they should have known - as should have taxpayers.
It's no wonder the Tea Party and Occupy Wall Street movements are gaining ground. Americans of all political stripes are sick of being lied to by Washington and tired of paying for its mistakes.