[Illustration by EMEK]
BLOOMBERG: The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money 
is going or what securities the banks are pledging in return. Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure. The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression. “It’s your money; it’s not the Fed’s money,” said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. “Of course there should be transparency.” MORE
CHICAGO TRIBUNE: The government on Monday provided a new, $150 billion financial-rescue package to American International Group Inc., almost doubling the initial bailout of less than two months ago as the insurer burns through cash. The action, announced by the Federal Reserve and the Treasury Department, was taken as it became increasingly clear that an original financial lifeline thrown to AIG in September would be insufficient to stabilize the teetering company. Fed officials expressed confidence that the money would be repaid to taxpayers. AIG will receive lower interest rates and $40 billion of new capital from the government to help ease the impact of four straight quarterly deficits, including a $24.5 billion third-quarter net loss posted Monday. MORE
LOS ANGELES TIMES: Will $700 billion be enough? That question emerged Monday as the Bush administration decided to pump more money into insurance giant American International Group Inc. and lawmakers pushed to extend the government’s rescue to the ailing automobile industry. Though the additional steps may ease financial stress on that company, they may only feed the demand from others seeking a share of the $700-billion rescue package that Congress had approved for the financial industry.
“It strengthens the argument of others to say, ‘Well, why not us?’ ” said Gary Schlossberg, senior economist with Wells Capital Management in San Francisco. He predicted that the additional dollars going to AIG would “lower the bar” for requests for government money from outside the financial industry. The new AIG pledge, coupled with similar aid for banks and other institutions, means that a significant portion of the $700 billion that Congress had approved for rescuing financial and other companies deemed vital to the economy has been committed. And pressure to widen the scope of such aid is growing as the economy sinks deeper into trouble.
“The money could go quickly,” said Daniel J. Ikenson, associate director of the Center for Trade Policy Studies at the Cato Institute, a free-market think tank. “As long as there is a big pot of money sitting here in Washington, every industry is going to ready its lobbyists to get a slice of that pie.” Already, the government has committed $250 billion to buy direct stakes in banks, and an additional $40 billion from the fund will go to AIG to supplement loan guarantees made before the rescue legislation was passed.
“What if a lot of these Silicon Valley start-ups can’t get financing — do we start bailing them out? Or Apple, or Microsoft, or Yahoo?” said Timothy J. Yeager, an associate finance professor at the University of Arkansas at Fayetteville and a former economist at the Federal Reserve Bank of St. Louis. “Where do you stop?” MORE
INTERNATIONAL HERALD TRIBUNE: The struggling auto industry was thrust into the middle of a political standoff between the White House and Democrats on Monday as President-elect Barack Obama urged President George W. Bush to support immediate emergency aid. Bush indicated at the meeting that he might support some aid and a broader economic stimulus package if Obama and congressional Democrats dropped their opposition to a free-trade agreement with Colombia, a measure for which Bush has long fought, people familiar with the discussion said.
The Bush administration, which has presided over a major intervention in the financial industry, has balked at allowing the automakers to tap into the $700 billion bailout fund, despite warnings last week that General Motors might not survive the year. Obama and congressional Democratic leaders say the administration has all the authority it needs under the bailout law to extend assistance. Obama went into his post-election meeting with Bush on Monday primed to urge him to support emergency aid to the auto industry, advisers to Obama said. But Democrats also indicate that neither Obama nor congressional leaders are inclined to concede the Colombia pact to Bush, and may decide to wait until Obama assumes power on Jan. 20. MORE
ASSOCIATED PRESS: Seattle-based Starbucks said profit in the quarter fell 97 percent to $5.4 million, or a penny a share, from $158.5 million, or 21 cents per share. The coffee retailer earned 10 cents per share when the costs from closing about 600 stores in the U.S. and 61 locations in Australia are excluded. Analysts expected profit of 13 cents per share, according to a poll by Thomson Reuters. MORE
RELATED:“We lost 2 billion dollars and like any other business we have to stay afloat.” And to keep from sinking, the United States Postal Service is considering cutting thousands of jobs nationwide. Lavelle Pepper with the post office in Shreveport says they too are feeling the affects of the same disease hitting the country… a struggling economy. “We employ about 685,000 people. If we do layoffs it would include clerks, carriers, mail handlers across all crafts.” MORE