If anything ever smelled of cronyism and favoritism it was the recent decision by the Federal Reserve to set up a special bargain basement where cheap loans are now available to Wall Street kingpins largely responsible for screwing up our economy.

The Fed has, in effect, put the biggest and most powerful investment banks on welfare at the expense of working-class taxpayers. The decision to do this settles, once and for all, the question of whether Wall Street interests have a controlling voice in the Federal Reserve Bank, an agency set up in the 1930’s to protect an economy that was supposed to work for all of us.

A congressional investigation of the Federal Reserve Bank would be well justified because of this and further justified because the Fed has also shown that it will continue to ignore the mandate Congress gave it when Congress created it – the mandate to guarantee a full employment economy in the United States. Cronyism, favoritism, and failure to carry out instructions from Congress would seem to be more than enough reasons to start a congressional probe.

The Fed’s new Primary Dealer Credit Facility (PDCF) is the mechanism created for the handouts to the financial kingpins. They get a cheap loan at a rock bottom interest rate of 2.5 percent and all they have to do is post some type of investment collateral – very often stocks or bonds that, themselves are of questionable value. The equivalent might be you getting a loan for a new car simply by posting your old clunker that has 200,000 miles on it as collateral! No job or income necessary!

While workers are forced to produce more for their stagnant or falling wages and receive no help as they try to accumulate assets, the Fed’s pals get nearly free government money to add to their pile of assets – as per JPMorgan gobbling up Bear Stearns.

Wall Street is banging down the doors at the Fed’s new loan handout facility. Within three days after its creation they ran in to grab $30 billion from U.S. taxpayers. Erin Callahan, treasurer of Lehman Brothers, called the deal “incredibly attractive.” Morgan Stanley’s treasurer, Colm Kelleher, said what he likes most is that the money is available for business as usual. In the past the kingpins couldn’t get the bargain rates unless they were in real trouble or, perhaps, suffering a severe seasonal cash shortfall.

Those “tough” days are over. Now the Fed is saying loan giveaways are available to the super rich, whenever and however they want them.

This new “welfare” program for the richest investors amounts to government subsidizing of a massive thievery ring that takes from American workers. Goldman Sachs, Lehman Brothers and Morgan Stanley, all now taking the new handouts, are huge profit makers. Even more insulting to workers, who get no help, is the fact that taxes paid by working people are given away to the very companies that have driven the worst trends in the U.S. economy – wage cuts, laying off of workers, export of jobs, union busting and outrageous pay for CEO’s.

The Fed’s giveaway program further insults workers when we consider the following: Many families are losing their homes because of the mortgage crisis created by the very companies getting the handouts. If the families had access to 2.5 percent loans they would be staying in their homes. Instead, their tax dollars go to Wall Street, they lose their homes and they end up on the street.

For too long the Federal Reserve Bank has been viewed, or at least portrayed, as a stable watch dog of our economy, looking out for everyone’s good – like a kind of gentle Big Brother. Anyone attacking the Fed, particularly those in the labor movement, have been dismissed as crazy radicals. We couldn’t survive without the Federal Reserve Bank, is what most people believed. What we did not see was the reality that the door to the Fed is a revolving one with the Wall Street executive board rooms. What we did not see is that the Federal Reserve Bank is a ruling class agency that conducts policy in the interests of that class.

It won’t be like this forever. This latest move by the Fed in this latest crisis has opened the eyes of many to the reality of its role.