The banking crisis intensified in 2008 when the subprime default wave exploded across the financial landscape. Major U.S. and foreign financial institutions shifted into high gear with leveraged speculation and undercapitalized hedging strategies. They gambled and lost. And many of them ended up with gaping capital holes in their balance sheets.
The U.S. Treasury Department quickly activated its Troubled Asset Relief Program (TARP) to recapitalize the very institutions that had precipitated the crisis with their high-stakes subprime gambling binge. Treasury bought equity stakes in those institutions and further helped them to erase billions of dollars worth of toxic debt from their balance sheets.
Federal Reserve also ran quickly to the rescue with its “secret liquidity lifelines” (Bloomberg 8-22-11). The Fed substantially eased some important collateral rules for banks, “meaning that banks that could once borrow only against sound collateral, like Treasury bills or AAA-rated corporate bonds, could now borrow against pretty much anything – including some of the mortgage-backed sewage that got us into this mess in the first place…. ‘All of a sudden, banks were allowed to post absolute [expletive deleted] to the Fed’s balance sheet,’ [according to] the manager of the prominent hedge fund.” (Source: Bailout Hustle, Matt Taibbi).
The Federal Reserve created various funding “facilities” to fire-hose liquidity out to the big banks and big brokerage firms:
Primary Dealers’ Credit Facility
Term Securities Lending Facility
Temporary Liquidity Guarantee Program
Commercial Paper Funding Facility
Term Auction Facility
Public Private Investment Program
As referenced previously, the top recipient: Morgan Stanley.
“Morgan Stanley, facing a crisis of confidence after the fall of Lehman Brothers Holdings Inc., got a $9 billion injection from Japanese bank Mitsubishi UFJ Financial Group Inc. and agreed to take a $10 billion bailout from the U.S. Treasury to shore up capital. As hedge-fund customers pulled funds out of the New York-based firm, it plugged the hole with $107.3 billion of secret loans from the Federal Reserve’s Primary Dealer Credit Facility and Term Securities Lending Facility, set up earlier in the year to supply brokerage firms with emergency financing.”
The Leviticus 25 Plan does not seek to ‘interrupt’ or reverse any of the special relationships that have developed in the Fed’s financial sphere. It only seeks to level the playing field – by providing U.S. citizens the same access to direct liquidity flows that the big banks enjoyed ‘in their time of need.’
The Leviticus 25 Plan proposes one additional upgrade to the Fed’s liquidity lines: U.S. Citizens Credit Facility.
U.S. citizens should demand nothing less. The time is now.
The Leviticus 25 Plan 2018 – $75,000 per U.S. citizen