As every fourth graders knows, the United States Constitution begins, “We the people…” In the years following adoption of the Constitution, there have been movements to include more classes or types of human beings into that “people” represented by the federal government. The basic rights guaranteed by the core philosophy of the government once applied to a narrow definition of people, but as education levels across all demographics have risen among all socioeconomic subcultures, more people demand to have a voice, or feel that they are represented, in federal government.

The government has always listened most closely to those with money, and as money spread to groups other than white men with a certain heritage, more people gained access to representation. The framers of the Constitution may feel like they represented all colonists in the United States (but certainly not the displaced natives), but they were wealthier and more educated than the rest of their communities. As overall wealth and education increased, rights were extended to black Americans and women, but only when pressured by grassroots initiatives; never have the wealthy in power made any move to share that power unless pressured — significantly pressured, over a long period of time.

Today, the wealthiest still wield the most power in government. While corporations, as of yet, cannot run for office, those who run the corporations can direct profits to initiatives that ensure their interests are well-represented at the expense of just about everyone else in the country, including the middle class. Just like the threat of a terrorist attack (or previously, the Cold War) is used as a reason to increase defense spending for the benefit of corporations connected to the military, the threat of an economic collapse is used to help persuade the public that corporations deserve every break they can get. These threats may very well be real, but the result is that what matters most to policy makers are the concerns of a small, wealthy group of Americans.

You may not agree with any of the above. I don’t intend to take a political approach to anything on Consumerism Commentary, but this is the context that is needed to understand what is going on with the Occupy Wall Street protests which, while they have spread beyond New York, are relatively under-reported or ignored by the press.

The reason for the under-reporting, according to the protesters, is that the media, even the more liberal news media in New York like WNYC and National Public Radio, is financially supported by Wall Street firms. They claim that both the Democratic Party and the Republican Party have the same corporations pulling the strings.

If there’s anything that can be learned from the Tea Party’s slow ascent from counterculture to the mainstream, it’s that the media won’t grant much attention to a movement until it reaches a critical mass and takes an extreme position. If the Occupy Wall Street movement wants more people to be aware of the issue that only the rich are represented by government, they will need to push the issue much harder, find ways to get on television, and convince the public that they are much more than lone groups of harmless rebels with cardboard signs. The Tea Party protesters weren’t taken seriously at first, either, but they transformed their scattered movements into relative cohesion after they managed to gain more publicity through actions and voices that could simply not be ignored any longer.

It has never been a secret that money buys political power. I don’t see any way for that to change, even if Occupy Wall Street successfully increases awareness of the issue throughout the country. Regardless, the protests will need to crescendo in order to get anyone outside the movement to pay attention for more than a minute.

Should government represent all citizens equally regardless of financial condition? Does focusing representation on the wealthy “trickle down” (an economic policy championed by a Republican) to lower classes by virtue of boosting the economy through the “rising tide” analogy (which is attributed to a Democrat)? Is there any difference in the economic ideologies between today’s Democrats and Republicans when they are all funded by major corporations?

Photo: david_shankbone

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We know about TARP, the program that used taxpayer money to lend to the biggest Wall Street banks tin an effort to prevent the collapse of the financial industry. The Federal Reserve loaned more money to Wall Street, however, in secret. The details are only coming out now thanks to the Freedom of Information Act and an act of Congress.

Besides TARP, banks received $1.2 trillion in federal loans, the details of which have been sorted through by Bloomberg. The programs include the Term Auction Facility, Commercial Paper Funding Facility, Primary Dealer Credit Facility, Term Securities Lending Facility (TSLF), Single-Tranche Open Market Operations, Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, and Discount Window.

• The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility gave loans to banks so they could meet withdrawal demands of customers invested in money market mutual funds.
• The Commercial Paper Funding Facility helped companies sell short-term bonds (with maturities less tan 270 days) to find their operations.
• The Discount Window allowed for more loans to banks to meet consumers’ withdrawal demands at a low borrowing rate.
• The Primary Dealer Credit Facility allowed brokerages to qualify for TARP-type loans, which were originally intended for banks, not brokerages.
• The Single-Tranche Open Market Operations created an auction for banks, using mortgage-backed assets as collateral.
• The Term Auction Facility was another set of loans for banks who feared the negative market reaction to using the Discount Window, loans of last resort.
• The Term Securities Lending Facility allowed banks to swap toxic assets for U.S. Treasuries.

The loans were not limited to American companies. In one of the most interesting cases, a German commercial property lender received $28.8 billion, double the amount the bank received from its own country, amounting to $21 million per employee. Like most companies taking advantage of these Federal Reserve lending facilities, this company did not make the details of the borrowing known until the program itself became public.

What kind of precedent does this set for future recessions? First, Federal Reserve lending comes at a cost to taxpayers. In some cases, government money has been exchanged for share ownership, and there’s a potential for the public to profit when that company recovers. It’s a risky investment for public money, and the public has very little influence in how their tax revenues are invested and spent. Keeping the $1.2 trillion in loans hidden from view might have been the only way the plan would have survived, with public opinion turning away from assisting Wall Street with more bailouts. Nevertheless, many economists believe these loans were necessary to prevent the destruction of the global financial industry.

Thanks primarily to the internet and the abundance of informational sources, you would think transparency is greater and that organizations would have a difficult time keeping major programs secret. While many people were aware of the existence of these programs, they weren’t nearly in the public eye as much as TARP was, and the extent of these programs and the affected companies were for the most part unknown until recently.

It’s worthwhile to note that $1.2 trillion is the peak amount of the loans. As some institutions paid back earlier loans, the proceeds were then available for new loans. The “same dollar” could have been used in several loans to several different companies at different times.

Bloomberg, Bloomberg

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