Since we first became aware of the credit and bank solvency crisis stemming from the subprime crisis back in the summer of 2007 we have noted the many efforts of the Federal Reserve to prop up the struggling banking industry. And when the whole house of cards blew up on Sept. 15, 2008 we reminded people that this was not a new crisis.
Since then we have pointed out that the fateful day in the fall of 2008 when our financial leaders at the Federal Reserve and Treasury Department chose not to bailout Lehman Brothers, was not the beginning of the credit crisis, just the day it could no longer be ignored.
On Thursday, the Real Economy Project of the Center for Media and Democracy (CMD) released an assessment of the total cost to taxpayers of the bailout. CMD concludes that multiple federal agencies have disbursed $4.6 trillion dollars in supporting the financial sector since the meltdown began. There is nearly $2 trillion outstanding and $14 trillion at risk.
The non-partisan, though left leaning organization, does us all a favor, especially as Congress debates financial reform. Many of the banks receiving government largesse have already returned to the status quo of passing out huge bonuses and showering Congress with lobbyists dollars.
It is good to remember the real cost. That this didn’t just begin with Lehman and TARP.
In fact, the CMD, try as they did, could not add up the total cost. Think about how interest rates were dropped not to boost a struggling economy (not at first anyway) but to allow the banking industry to recover from its self inflicted wounds of over leverage.
Measure the cost to every saver, every banking account wallowing around earning a couple of percentage points because the Fed had to try and save the banking industry. The costs are high and still adding up. We should think about that when someone tries to say that the banking industry has paid off its TARP loan.