With the lifting of the “veil of secrecy at the Fed,” in response to a legislative push led by US Senator Bernie Sanders, I-Vermont, reveals that the Federal Reserve gave banks, multinational corporations and foreign financial institutions—many of them with limited ties to the United States—an estimated $3.3 trillion in emergency loans and other forms of assistance during the course of the current financial crisis.

“We now know that the Fed loaned trillions of dollars at zero or near-zero interest rates not only to the largest financial institutions in this country, but also to many of our largest corporations—including GE, McDonalds and Verizon. Most surprising, the Fed also lent huge sums of money to foreign private banks and corporations” says Sanders, who since the 1990s has, with Texas Congressman Ron Paul, Florida Congressman Alan Grayson and a handful of others, been an ardent critic of the Fed’s secrecy, unaccountable financial manipulations and coziness with Wall Street.

The document dump confirms that the $700 billion Treasury Department bank bailout out signed into law under President George W. Bush in 2008 was a small down payment on an secretive "backdoor bailout" that saw the Fed provide roughly $3.3 trillion in liquidity and more than $9 trillion in short-term loans and other financial arrangements. With hundreds of billions in US money going to foreign financial institutions, Sanders asks: "Has the Federal Reserve of the United States become the central bank of the world?"

Questions like that explain why the Fed did not want to release this information. Fed chairman Ben Bernanke lobbied against the amendment Sanders attached to the financial services reform legislation passed this year by the Congress.  Sanders and his allies prevailed—although not too the full extent that they had hoped—in forcing an the release of secret Fed files and forcing the Government Accountability Office to conduct a top-to-bottom audit of the Fed.

“Almost two years ago I asked Chairman Bernanke to tell the American people which financial institutions and corporations received trillions of dollars as part of the Wall Street bailout.  He refused,” says Sanders. “Today, as a result of an audit-the-Fed provision I put into the financial reform bill, we finally learn the truth—and it is astounding.”

So astounding, in fact, that even the Wall Street Journal is praising Sanders. "The release of this data on some 21,000 Fed transactions over the last three years is one of the rare useful provisions in (the financial reform bill)," writes the Journal, adding, "kudos to our favorite Socialist for demanding it."

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• Citigroup collected over $1.8 trillion. 

• Morgan Stanley grabbed $2 trillion. 

• Goldman Sachs took $600 billion. 

• Bear Stearns received almost $1 trillion in short-term loans with interest rates as low as 0.5 percent.

While the banks—and corporations such as Verizon and Toyota—collected trillions, Sanders said, the American people got little in return. Why? Because, as the senator notes, the documents reveal that “the Fed failed to require loan recipients to invest in rebuilding our economy and protect the needs of ordinary Americans.” 

Indeed, Sanders suggests, the paperwork from the Fed raises the prospect that the banks and corporations used the money to pad their bottom lines. Indeed, an analysis by Sanders’ office, points to the prospect that  “secret Fed loans turned out to be direct corporate welfare to big banks.” 

Sanders wants an investigation to determine whether banks took loans at near-zero interest and then loaned that same money back to the federal government at a significantly higher interest rate.  

"Instead of using this money to reinvest in the productive economy, I suspect a large portion of these near-zero interest loans were used to buy Treasury securities at a higher interest rate providing free money to some of the largest financial institutions in this country on the backs of American taxpayers," says Sanders. 

Sanders also wants to know: "How many big banks repaid Treasury Department bailouts in order to avoid limits on executive compensation received no-strings attached loans from the Federal Reserve?" 

Those are all good questions. 

Here’s one more: Isn’t it time for members of Congress to get serious about proposals to free up money sitting in Fed accounts so that it can strengthen the US economy—as opposed to merely collect interest for big banks and corporations? 

Robert Pollin, the co-director of the Political Economy Research Institute at the University of Massachusetts-Amherst who has written extensively about the Fed and economic issues for The Nation, has been in the forefront of this debate. 

Here’s a brief outline from Pollin of his smart proposal: 

"The federal government must continue to aggressively fight the recession created by Wall Street hyper-speculation and promote recovery through both spending measures and credit market interventions. 

"Austerity is not a solution. The federal government’s deficit spending over the past two years succeeded in averting a 1930s-style depression. Large deficits are still needed now to prevent the economy’s rickety floor from collapsing. Are the deficit hawks really prepared, for example, to preside over mass layoffs of teachers, nurses and police officers that would result without continued large-scale federal support for state and local governments? 

"Credit must be channeled to small business. Credit markets remain locked up, especially for small businesses, while banks are holding an unprecedented $1.1 trillion in cash reserves. The Federal Reserve’s new "quantitative easing" is a halfway solution. It directly reduces interest rates for longer-term US Treasury bonds only. It will not be effective at lowering interest rates and risks for private borrowers and lenders. 

"Two initiatives—one carrot and one stick—can deliver lower rates and risks to businesses. The carrot is an expansion of existing federal loan guarantees by $300 billion, which would roughly double what’s annually available now. Small businesses should be the primary beneficiaries. The stick is a 1% to 2% tax on the excess cash reserves now held by banks, to push them to become more bullish on loans for job-creating investments. 

"These measures could generate about 3 million jobs as the $300 billion in loan guarantees turns into new business investments. Job creation would be sgnificantly higher if a large proportion of the spending were for green activities such as retrofitting buildings to make them energy-efficient. Job creation per dollar of green investments is about 50% greater than the economy-wide average. The total costs for the program—mostly from loan defaults—would almost certainly be well below 1% of the federal budget."