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In the stimulus package, passed earlier in March, $454 billion was allocated towards the Federal Reserve to help facilitate emergency lending, according to Bloomberg. However, this amount of money can be leveraged to fund up to $4.5 trillion dollars in emergency loans. For every $10 lent out by the Federal Reserve, only $1 dollar has to be held by the Treasury Department. Consequently, the Federal Reserve now has the ability to lend widely to banks on Wall Street and large companies.

Let’s be clear, this only sets up the Federal government to absorb potential losses if banks and large companies are unable to pay back these loans. Additionally, bailed out banks on Wall Street that turn a profit after the pandemic will be able to keep all these gains in their own reserves. The Federal government shoulders the risk with low chance of receiving high returns.

In effect, the government has been turned into a welfare state for capitalism’s largest players without those very players contributing the capital needed to finance such expansive welfare policy. Instead, these bailouts have been funded by taxpayer dollars. There is clear inequity in terms of the support provided to the average taxpayer compared to the support provided to Wall Street and other large companies.

If the Federal Reserve fully leverages the $454 billion from the CARES Act, the central bank will be able to absorb all outstanding commercial and industrial loans from 2019 and also absorb all new corporate bonds that were issued last year, according to the Wall Street Journal. $2.35 trillion in commercial and industrial loans were still unpaid as of last year and $1.41 trillion in corporate bonds were issued last year.

However, the welfare state has not been as kind to the average taxpayer and falls short of fully covering the financial distress brought on by the coronavirus pandemic. The CARES Act only allocated a one-time payment of $1200 dollars to taxpayers and unemployment benefits was only expanded to provide an additional $600 per week until July 31st, according to the New York Times.

Some have tried to rationalize this large bailout primarily aimed at big banks as an effort to save “main street” rather than Wall Street.

“There is a transmission channel from large corporations, to small- and medium-sized enterprises and to households,” said Constance Hunter, chief economist at KPMG in New York.

Wall Street is still asking for more support from the Federal Reserve. More specifically, big banks on Wall Street are asking that their “shadow banking system” be bailed out by having high-risk credit securities be bought up by the Federal Reserve, according to the Washington Post.

Organizing for this type of bailout is coming for investment banks, hedge funds and private credit funds. Risky credit instruments are now selling at a loss, 60 to 80 cents on the dollar, and that puts many wealthy investors in a position to lose a substantial amount of money during the pandemic. Wall Street, despite receiving more government support than the average taxpayer, continues to ask for more.