After they behaved badly and almost ruined the entire world financial system while pocketing fat fees along the reckless road they laid down, the big banks got 'made whole' by the Federal Reserve.
While couched at the time in fancy acronyms, a lot of complexity, and some good old motherhood and apple pie (that is, the Fed talked about helping the economy recover and people get their jobs back), the truth of the matter is simply that the Fed cared only about helping the big banks repair their balance sheets.
Which is the same thing as protecting them from the consequences of their ridiculously poor decisions.
In the Wall Street Journal today was this gem of an admission from a former Fed staffer:
Confessions of a Quantitative Easer
Nov 11, 2013
By Andrew Huszar
I can only say: I'm sorry, America.
As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time. (…)
It wasn't long before my old doubts resurfaced. Despite the Fed's rhetoric, my program wasn't helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn't getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.
From the trenches, several other Fed managers also began voicing the concern that QE wasn't working as planned. Our warnings fell on deaf ears. In the past, Fed leaders—even if they ultimately erred—would have worried obsessively about the costs versus the benefits of any major initiative. Now the only obsession seemed to be with the newest survey of financial-market expectations or the latest in-person feedback from Wall Street's leading bankers and hedge-fund managers. Sorry, U.S. taxpayer.
(Source)
I think it's great that Mr. Huszar has come to now realize that the Fed's program of QE is really the greatest back-door bank bailout of all time. I've always said as much, because that was patently obvious right from the get go.
by westcoastjan 
