Details of toxic waste not forthcoming

In a follow-up to last week's announcement that they had filed suit against the Federal Reserve after failing to obtain requested data under the Freedom of Information Act about all the toxic waste the U.S. government is buying from Wall Street firms on behalf of the American taxpayer, an update was filed at Bloomberg today.

(I don't know if you've noticed or not, but all these mortgage securities and derivatives that the Fed and Treasury are buying on our behalf are now commonly referred to as "toxic waste" in the mainstream media - not in this story, but in many others. At first it was odd, now it seems routine.)

Bloomberg's desire to have a peak at some of the details of all this waste seems to be a quite reasonable request.

That is, everything except the part about this being taxpayer money that is being spent.

When rescue money flows from government coffers as it has in recent months, debts quickly grow too large to be repaid and money printing soon becomes a justifiable means to an end.

All of this new government money being borrowed or printed will just get tacked onto the existing tab - either the national debt or future inflation - and, at some point, the U.S. government will default on a large portion of its debt and we'll have much higher prices.

If we survive, that is. That's what's important now.

Remember, you can't worry about water damage when you're putting out a fire ... and this is one very large fire.

The taxpayer shouldn't really be concerned about repayment. After all, every U.S. citizen already owes tens of thousands of dollars that they'll never have to pay back. But, it would be nice to know exactly what it is that the government is buying.

Bloomberg provides the details:

Fed Defies Transparency Aim in Refusal to Identify Bank Loans
Nov. 10 -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.
...
Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.
The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.
...
Total Fed lending topped $2 trillion for the first time last week and has risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds.

Before Sept. 14, the Fed accepted mostly top-rated government and asset-backed securities as collateral. After that date, the central bank widened standards to accept other kinds of securities, some with lower ratings. The Fed collects interest on all its loans.

In an interview last week Representative Barney Frank (D-Mass.) said he's talked with Fed officials such as Federal Reserve Bank of New York President Timothy Geithner and deems the recent actions appropriate.

He went on to note, "I talk to Geithner and he was pretty sure that they're OK."

Wheww!!

Actually, there seems to be a perhaps legitimate concern that revealing prices paid for these assets could be disruptive to financial markets, in some cases establishing a market value for similar securities.

Maybe that would be a good thing.

That is, as long as the government overpays - and there should be no question about the fact that they are doing just that.