Foreign Banks Used Fed Secret Lifeline Most at Crisis Peak

[OhioChick]

Source: Bloomberg

Apr 1, 2011 1:53 PM ET

U.S. Federal Reserve Chairman Ben S. Bernanke’s two-year fight to shield crisis-squeezed banks from the stigma of revealing their public loans protected a lender to local governments in Belgium, a Japanese fishing-cooperative financier and a company part-owned by the Central Bank of Libya.

Dexia SA (DEXB), based in Brussels and Paris, borrowed as much as $33.5 billion through its New York branch from the Fed’s “discount window” lending program, according to Fed documents released yesterday in response to a Freedom of Information Act request. Dublin-based Depfa Bank Plc, taken over in 2007 by a German real-estate lender later seized by the German government, drew $24.5 billion.

The biggest borrowers from the 97-year-old discount window as the program reached its crisis-era peak were foreign banks, accounting for at least 70 percent of the $110.7 billion borrowed during the week in October 2008 when use of the program surged to a record. The disclosures may stoke a reexamination of the risks posed to U.S. taxpayers by the central bank’s role in global financial markets.

“The caricature of the Fed is that it was shoveling money to big New York banks and a bunch of foreigners, and that is not conducive to its long-run reputation,” said Vincent Reinhart, the Fed’s director of monetary affairs from 2001 to 2007.

Read more: http://www.bloomberg.com/news/2011-04-01/foreign-banks-tapped-fed-s-lifeline-most-as-bernanke-kept-borrowers-secret.html

[xchrom]

1. Recommend

[Roy Rolling]

2. spin

So the spin is "the loans were paid back with interest" However the interest rate is almost zero percent and the loans were paid back after the zero-percent interest money was lent at a higher rate to others. How can you lend at zero percent to mega banks at almost zero percent when the risk of total collapse of the system is great? Try asking for a rate of zero percent on your mortgage and see where that gets you...

[ozone_man]

7. Precisely! n/t

[bemildred]

3. And THAT was the secret, who it was that the US was bailing out. nt

[Scuba]

4. Sounds like....

...the world is already under the rule of a global corporatocracy and the illusion of "nations" is rapidly disappearing.

[Octafish]

5. Everybody gets money except We the People.

Anyone else noticing this?

[Scuba]

6. Gee, now that you mention it. n/t