Sanders uses 'jaw-dropping' Fed disclosures to call for further inquiry

"After years of stonewalling by the Fed, the American people are finally learning the incredible and jaw-dropping details of the Fed's multi-trillion-dollar bailout of Wall Street and corporate America," he said in a statement. "Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations. As a result of this disclosure, other members of Congress and I will be taking a very extensive look at all aspects of how the Federal Reserve functions."

Sanders specifically said he wants to explore whether institutions used near zero-interest-loans from the Fed to buy higher-yielding Treasury bonds.

"That's corporate welfare," he said. "This is something that has to be examined very closely."

He also said he wanted to dig into whether large financial institutions prematurely paid back funds from the Troubled Asset Relief Program to avoid executive compensation limits while still relying on loans from the Fed.

"These guys on another planet operate to protect their own incredible wealth while they ignore the needs of the average American," he said.

Sanders blasted the disclosures as evidence of the Fed handing out near zero-interest loans to massive corporations and banks, while "ordinary Americans" continued to struggle.

A provision included in the Dodd-Frank financial reform law backed by Sanders required the central bank to disclose its activities during the financial crisis. The Fed complied by releasing data on more than 21,000 transactions worth $3.3 trillion it undertook with financial firms, corporations and other central banks worldwide.

Those disclosures revealed the Fed had a further reach during the financial crisis than previously realized. Major corporations like McDonald's and Verizon tapped the Fed for short-term commercial paper notes after that market had frozen, and foreign central and private banks also turned to the Fed for short-term loans. 

Sanders' volley comes after the Fed has had to fend off political attacks from both Republicans and Democrats over its recent decision to buy $600 billion of long-term Treasury bonds in a second "quantitative easing" effort.

Republicans leaders contend the move will lead to inflation and a weakened dollar.

However, Sanders disagreed with a recent suggestion from some GOP members that the Fed lose its dual mandate of maximizing employment and controlling inflation, and instead have it focus exclusively on the latter.

Rather, he said the Fed's power should be "redirected" to address the needs of ordinary Americans over massive corporations.

Sanders noted that his provision also requires the Government Accountability Office to undertake a "top to bottom" audit of all the Fed's emergency lending. That report is due by July 21, 2011.