The Big Bank Bailout 2008 (And exactly why the US is $38+ trillion in debt)

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Most people think that the big bank bailout was the $700 billion that the treasury department used to save the banks during the financial crash in September of 2008. But this is a long way from the truth because the bailout is still ongoing.

The Special Inspector General for TARP summary of the bailout says that the total commitment of government is $16.8 trillion dollars with the $4.6 trillion already paid out.

Yes, it was trillions not billions and the banks are now larger and still too big to fail. But it isn’t just the government bailout money that tells the story of the bailout. This is a story about lies, cheating, and a multi-faceted corruption which was often criminal.

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The operating principles of the big banks is a cesspool of greed, ethics and criminal intent and they give a very bad name to free market capitalism. During the housing bubble Wall street was considered the heart and soul of free market capitalism, but when they were in danger of total collapse they fell on their knees as socialists, begging the government and tax payers to bail them out

Many people have asked why the government bailed them out. Isn’t capitalism designed to get rid of the weak and the failed; so why didn’t we just let them fail? [Their] answer was that they were too big to fail and allowing them to fail could have created a worldwide depression.

In fact, in a meeting with Congress on September 18th, 2008. Treasury Secretary Paulson told the members that $5.5 trillion in wealth could disappear by 2pm of that day. In a meeting with Senator Sherrod Brown, Secretary Paulson and Federal Reserve Chairman Ben Bernanke said, “we need $700 billion and we need it in 3 days.”

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So how did this all happen?


1999-Republican Phil Gramm successfully led the effort that repealed most of the Glass-Stiegel Act, which was a depression era law that kept Commercial Banking and Investment separated.


2007 – The speculation and lack of effective regulation eventually led to the crash of 2007 and The Great Recession. The industry is not afraid to do it again because they know no one goes to jail and the government will bail them out.

Why didn’t more people know that the bailout had climbed into the trillions?

In an article Secrets and Lies of the Bailout, Matt Taibbi says “It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people.

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After the original $700 billion bailout, the ongoing bailout was kept very secret because Chairman Ben Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort. In fact, $7.7 trillion of the secret emergency lending was only disclosed to the public after Congress forced a one-time audit of the Federal Reserve in November of 2011.

After the audit the public found out the bailout was in trillions not billions; and that there were no requirements attached to the bailout money - the banks could use it for any purpose.

The big got even bigger

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The problem is that the big Banks have enormous lobbying power to buy off Congress.


Wall Street’s gambling created a giant hole in our economy.

In just a few months 8 million people lost their jobs and it created the greatest recession since the Great Depression... William Banzai put the big bank problem in perspective when he said, “If we don’t get rid of the incentive to loot, then the only question is what form the next round of looting will take.”

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