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Audit: Fed gave $16 trillion in emergency loans

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The U.S. Federal Reserve gave out $16.1 trillion in emergency loans to U.S. and foreign financial institutions between Dec. 1, 2007 and July 21, 2010, according to figures produced by the government’s first-ever audit of the central bank.

Last year, the gross domestic product of the entire U.S. economy was $14.5 trillion.

Of the $16.1 trillion loaned out, $3.08 trillion went to financial institutions in the U.K., Germany, Switzerland, France and Belgium, the Government Accountability Office’s (GAO) analysis shows.

Additionally, asset swap arrangements were opened with banks in the U.K., Canada, Brazil, Japan, South Korea, Norway, Mexico, Singapore and Switzerland. Twelve of those arrangements are still ongoing, having been extended through August 2012.

Out of all borrowers, Citigroup received the most financial assistance from the Fed, at $2.5 trillion. Morgan Stanley came in second with $2.04 trillion, followed by Merill Lynch at $1.9 trillion and Bank of America at $1.3 trillion.

The audit also found that the Fed mostly outsourced its lending operations to the very financial institutions which sparked the crisis to begin with, and that they delegated contracts largely on a no-bid basis. The GAO report recommends new policies that would eliminate such conflicts of interest, and suggests that in the future the Fed should keep better records of their emergency decision-making process.

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The Fed agreed to “strongly consider” the recommendations, but as it is not a government-run institution it cannot be forced to do so by lawmakers. The seven-member board of governors and the Fed chairman are, however, appointed by the President of the United States and confirmed by the Senate.

The audit was conducted on a one-time basis, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed last year. Fed officials had strongly discouraged lawmakers from ordering the audit, claiming it may serve to undermine confidence in the monetary system.

The full GAO audit results follow, below.

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GAO Fed Investigation

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DOJ money laundering probe of Deutsche Bank includes Kushner transactions: report

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The U.S. Department of Justice (DOJ) is conducting a criminal investigation of possible money laundering violations by Deutsche Bank, and the New York Times is reporting that the probe will include taking a look at some 2016 transactions involving Kushner Cos. — the business owned by the family of Senior White House Advisor Jared Kushner, President Donald Trump’s son-in-law.

In banking, reports of possibly suspicious activity are known as “suspicious activity reports,” and the DOJ is investigating why Deutsche Bank prepared such alerts for activity involving Kushner Cos. but did not file them. A key figure in the DOJ’s investigation is whistleblower Tammy McFadden, who helped prepare suspicious activity reports for Kushner Cos.-related transactions. McFadden is a former compliance officer for Deutsche Bank.

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2020 Election

Joe Biden promises to answer questions about his son’s overseas business dealings — after he’s elected

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Joe Biden refused to answer questions about his son's overseas business dealings.

The Democratic presidential frontrunner has been criticized for conducting diplomatic work as vice president in countries were his son, Hunter Biden, was engaged in business, but he refused at two campaign stops Monday to take questions about the controversy, reported ABC News.

Instead, his campaign promised that Biden would issue an executive order "on his first day in office" to "address conflicts of interest of any kind."

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‘Come heavily armed’: Oregon GOP lawmaker threatens state troopers over dispute with Dem governor

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On Wednesday, The Oregonian reported that GOP state Sen. Brian Boquist threatened to kill state troopers if they try to keep him in the Senate chamber to debate climate change legislation.

"I'm quotable, so here's the quote. This is what I told the [police] superintendent," said Boquist to reporters outside the Senate chamber. "Send bachelors and come heavily armed. I'm not going to be a political prisoner in the state of Oregon. It's just that simple."

Democratic Gov. Kate Brown has made passing a climate change bill one of her top priorities. While Democrats control Oregon's legislature, Senate Republicans have enough votes to block legislation by walking out and denying a quorum — which they have done to stonewall this legislation.

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