Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
Keep CounterPunch ad free. Support our annual fund drive today!

Fed Insider Exposes Giant Central Bank "Easing" Swindle


“This was a program (QE) that was devised to help mortgage lending in America…Instead, what we saw was massive Wall Street earnings.” Andrew Huszar, Bloomberg TV Interview

A former Federal Reserve official who helped the Central Bank manage its bond buying program, dubbed QE, has admitted that the program is a fraud. In a shocking op-ed in Monday’s Wall Street Journal, Andrew Huszar apologized for his role in the Fed’s $1.25 trillion asset purchase program which he described as “the greatest backdoor Wall Street bailout of all time.”

So far, no one at the Fed has responded to the charges, nor has Congress or the Department of Justice (DOJ) taken steps to investigate allegations that the multi-trillion dollar program was not intended to help Main Street as announced, but to shore up flagging bank balance sheets and zombie financial institutions that would have defaulted without the Fed’s stealth welfare program.

Surprisingly, Huszar’s credibility has not yet been challenged nor his claim that he played a pivotal role in overseeing the program. As he notes in his confession, he was “managing what was at the heart of QE’s bond-buying spree—a wild attempt to buy $1.25 trillion in mortgage bonds in 12 months.” He was asked “to quarterback” the largest giveaway to Big Finance on record. The fact that his allegations have not prompted an thorough investigation of criminal malfeasance at the Fed boggles the mind and points to a justice system that makes no pretense of operating in the interests of the people it is supposed to serve.

Huszar admits that he left the Fed –where he’d worked for seven years– because he’d “witnessed the institution deferring more and more to Wall Street”, that is, implementing policies which only benefited the banks.

“I had come to believe that the Fed’s independence was eroding,” says Huszar. These feelings were reinforced when Huszar was asked to purchase hundreds of billions of dollars of mortgage-backed securities, which according to him, put the system at risk of another crash.

“We constantly risked driving bond prices too high and crashing global confidence in key financial markets,” he said. “We were working feverishly to preserve the impression that the Fed knew what it was doing.” (“Andrew Huszar: Confessions of a Quantitative Easer“, Wall Street Journal)

The implication is clear, the Fed shrugged off its mandate of “price stability” and deliberately put the system at risk in order to assist its primary constituents, the banks.

It wasn’t long before Huszar figured out the program was a fake and that QE “wasn’t helping to make credit any more accessible for the average American. The banks were issuing fewer and fewer loans,” he said. “More insidiously, whatever credit they were extending wasn’t getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.” (WSJ)

This column has been making this same point for more than two years, that all the profits on the interest rate spreads were going to the banks. QE has not led to a credit expansion nor was it designed to do so. It is a lavish subsidy to the financial elites and deep pocket bondholders who control the political-economic system. Huszar’s testimony further underscores that point.

Huszar again: “From the trenches, several other Fed managers also began voicing the concern that QE wasn’t working as planned. Our warnings fell on deaf ears. In the past, Fed leaders—even if they ultimately erred—would have worried obsessively about the costs versus the benefits of any major initiative. Now the only obsession seemed to be with the newest survey of financial-market expectations or the latest in-person feedback from Wall Street’s leading bankers and hedge-fund managers.” (WSJ)

No one cared that QE was not stimulating credit, because that was not the objective. The real goal was to boost profits at the banks so they could offset the massive losses on their trove of mortgage-backed assets which dropped precipitously following the Crash of ’08 leaving them exposed to potential restructuring and nationalization. The $700 billion from the TARP bailout merely provided enough operating capital for the banks to continue to run their businesses. In contrast, QE was a strategy to drain the ocean of red ink from bank balance sheets and restore them to profitability. What mattered was profits. Profits at the expense of employment, profits at the expense of growth, profits at the expense the nation’s economic future. Profits, profits, profits. How can anyone fail to see that now?

Huszar again: “Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank’s bond purchases had been an absolute coup for Wall Street. The banks hadn’t just benefited from the lower cost of making loans. They’d also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed’s QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.” (WSJ)

See? It was an “absolute coup for Wall Street”…the “most profitable year ever.” In other words, QE was a transparent ripoff from the get go, and the Bernanke Fed orchestrated the entire affair.

And it didn’t stop there either, because the Fed launched three more versions of QE increasing its balance sheet by nearly $4 trillion while inflating asset bubbles in US Treasuries, equities, junk bonds, farmland, housing and financial assets across-the-board. The Fed has created a gigantic bubble in long-term Treasuries which threatens the world’s biggest and most liquid bond market and puts the dollar at risk of losing its position as the world’s reserve currency.

Huszar admits that the Fed’s actions have dealt a blow to the so called “free market” calling QE “the largest financial-markets intervention by any government in world history.” He also dispels the illusion that QE spurred growth in the real economy. (“Even by the Fed’s sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth.”) He also admits that the Wall Street banks are cartel that’s been strengthened by the Fed’s actions. (“The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.”) And, he also suggests that the Fed suffers from “regulatory capture”, that is, that monetary policy is shaped in a way that best advances the interests of the banks. (“I had come to believe that the Fed’s independence was eroding.”)

Huszar’s testimony leaves little doubt that QE is a P.R. scam designed to pull the wool over the publics eyes. While the Fed’s critics have always said that that was the case, Huszar is the first insider to confirm those claims and to denounce the program as a blatant bailout for the banks.

So where are the regulators? Where are the investigations? Where is the DOJ or the US Congress?

Where is the outrage?

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at

More articles by:

2016 Fund Drive
Smart. Fierce. Uncompromised. Support CounterPunch Now!

  • cp-store
  • donate paypal

CounterPunch Magazine


Weekend Edition
October 21, 2016
Friday - Sunday
John Wight
Hillary Clinton and the Brutal Murder of Gaddafi
Diana Johnstone
Hillary Clinton’s Strategic Ambition in a Nutshell
Jeffrey St. Clair
Roaming Charges: Trump’s Naked and Hillary’s Dead
John W. Whitehead
American Psycho: Sex, Lies and Politics Add Up to a Terrifying Election Season
Stephen Cooper
Hell on Earth in Alabama: Inside Holman Prison
Patrick Cockburn
13 Years of War: Mosul’s Frightening and Uncertain Future
Rob Urie
Name the Dangerous Candidate
Pepe Escobar
The Aleppo / Mosul Riddle
David Rosen
The War on Drugs is a Racket
Sami Siegelbaum
Once More, the Value of the Humanities
Cathy Breen
“Today Is One of the Heaviest Days of My Life”
Neve Gordon
Israel’s Boycott Hypocrisy
Mark Hand
Of Pipelines and Protest Pens: When the Press Loses Its Shield
Victor Wallis
On the Stealing of U.S. Elections
Michael Hudson
The Return of the Repressed Critique of Rentiers: Veblen in the 21st century Rentier Capitalism
Brian Cloughley
Drumbeats of Anti-Russia Confrontation From Washington to London
Howard Lisnoff
Still Licking Our Wounds and Hoping for Change
Brian Gruber
Iraq: There Is No State
Peter Lee
Trump: We Wish the Problem Was Fascism
Stanley L. Cohen
Equality and Justice for All, It Seems, But Palestinians
Steve Early
In Bay Area Refinery Town: Berniecrats & Clintonites Clash Over Rent Control
Kristine Mattis
All Solutions are Inadequate: Why It Doesn’t Matter If Politicians Mention Climate Change
Peter Linebaugh
Ron Suny and the Marxist Commune: a Note
Andre Vltchek
Sudan, Africa and the Mosaic of Horrors
Keith Binkly
The Russians Have Been Hacking Us For Years, Why Is It a Crisis Now?
Jonathan Cook
Adam Curtis: Another Manager of Perceptions
Ted Dace
The Fall
Sheldon Richman
Come and See the Anarchy Inherent in the System
Susana Hurlich
Hurricane Matthew: an Overview of the Damages in Cuba
Dave Lindorff
Screwing With and Screwing the Elderly and Disabled
Chandra Muzaffar
Cuba: Rejecting Sanctions, Sending a Message
Dennis Kucinich
War or Peace?
Joseph Natoli
Seething Anger in the Post-2016 Election Season
Jack Rasmus
Behind The 3rd US Presidential Debate—What’s Coming in 2017
Ron Jacobs
A Theory of Despair?
Gilbert Mercier
Globalist Clinton: Clear and Present Danger to World Peace
James A Haught
Many Struggles Won Religious Freedom
Kollibri terre Sonnenblume
Dear Fellow Gen Xers: Let’s Step Aside for the Millennials
Uri Avnery
The Peres Funeral Ruckus
Tom Clifford
Duterte’s Gambit: the Philippines’s Pivot to China
Reyes Mata III
Scaling Camelot’s Walls: an Essay Regarding Donald Trump
Raouf Halaby
Away from the Fray: From Election Frenzy to an Interlude in Paradise
James McEnteer
Art of the Feel
David Yearsley
Trump and Hitchcock in the Age of Conspiracies
Charles R. Larson
Review: Sjón’s “Moonstone: the Boy Who Never Was”