From the Levy Institute:
There have been a number of estimates of the total amount of funding provided by the Federal Reserve to bail out the financial system. For example, Bloomberg recently claimed that the cumulative commitment by the Fed (this includes asset purchases plus lending) was $7.77 trillion. As part of the Ford Foundation project “A Research and Policy Dialogue Project on Improving Governance of the Government Safety Net in Financial Crisis,” Nicola Matthews and James Felkerson have undertaken an examination of the data on the Fed’s bailout of the financial system — the most comprehensive investigation of the raw data to date. This working paper is the first in a series that will report the results of this investigation.
The extraordinary scope and magnitude of the recent financial crisis of 2007–09 required an extraordinary response by the Fed in the fulfillment of its lender-of-last-resort function. The purpose of this paper is to provide a descriptive account of the Fed’s response to the recent financial crisis. It begins with a brief summary of the methodology, then outlines the unconventional facilities and programs aimed at stabilizing the existing financial structure. The paper concludes with a summary of the scope and magnitude of the Fed’s crisis response. The bottom line: a Federal Reserve bailout commitment in excess of $29 trillion.
Most disappointingly of all it sustained high systemic debt levels. Without liquidation of bad assets and bad debt capitalism stops working. An essential mechanism of capitalism is that new systems continually grow up to replace the old. That’s creative destruction. Without creative destruction, there is just stagnation.
In the eyes of the wider people, though, the greater trouble with these bailouts is their morality. If I leveraged all my assets, went to Vegas and lost it all playing blackjack, I wouldn’t get a bailout. That’s what the arbitrageurs of the international financial system did: they might have dressed up their addictions in the sophistry of mathematics, but the truth is it is all just gambling. Bailing out upper-echelon gamblers is just looting and pillaging the faith and credit of the world.