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The Real Scandal of the Fed’s Secret Loans

November 28, 2011

In his new position as Slate’s Moneybox columnist, Matt Yglesias has a primer on Bloomberg’s investigation into the secret loans made by the Federal Reserve during the depths of the financial crisis in 2008-2009. The loans were done below board without public knowledge and the Federal Reserve and the banks attempted to keep them that way but Bloomberg was able to secure over 29,000 pages of documents through FOIA requests that exposed the program. The final verdict, as summarized by Yglesias: while the hidden loans were defensible as responding to the economic crisis, the Fed’s subsequent failure to respond to the damage that the crisis has caused to Main Street is not. That, he says, is “the real scandal”. While the Fed’s actions allowed many banks to stay in business and even profit, the Fed hasn’t taken anywhere near as robust action to decrease unemployment. Both pieces are worth reading, though Yglesias’s is quicker for the time-pressed.

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