An analysis of tens of thousands of documents obtained by Bloomberg through a Freedom of Information Act (FOIA) request shows that the U.S. Federal Reserve made approximately $1.2 trillion in loans from public money to support Wall Street firms in the midst of one of the worst financial crises ever.
Differing from the $16 trillion in loans made through asset swaps and preferred stock agreements, which were first revealed by a recent Government Accountability Office (GAO) audit mandated by Congress, these loans came from public money, representing the greatest largess of the financial sector during a crisis that threatened to pull the whole globalized system of finance to its knees.
Made from August 2007 through April 2010, the largest borrowers included familiar names like Morgan Stanley, which took $107.3 billion; Citigroup at $99.5 billion; and Bank of America with $91.4 billion.
Foreign firms got a piece of the pie too: the Royal Bank of Scotland Plc was given $84.5 billion; UBS AG took $77.2 billion; and German bank Hypo Real Estate Holding AG took out $28.7 billion, according to Bloomberg.
The Fed claimed it suffered “no credit losses” on the emergency loans, insisting that it has even made back over $13 billion in interest and fees. The loans were made in secret, and not even disclosed to the GAO, to prevent the appearance of weakness in the system, the Bloomberg report said.
Stephen C. Webster
Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.
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