NEW YORK—New Federal Reserve Bank disclosures—required under the newly enacted Dodd-Frank Act—showed that the U.S. central bank gave loans worth more than $3.3 trillion to U.S. and foreign banks during the global financial crisis.
In a disclosure this week of more than 21,000 transactions, the Fed showed that the global business sector, from banks to major corporations, leaned heavily on borrowings from the bank during the financial crisis.
Top beneficiaries were large U.S. banks, including Citigroup Inc., Bank of America Corp., Morgan Stanley & Co., and Goldman Sachs Group Inc.
Lending was heavy in 2008 during the height of the crisis, and Bank of America—which bought the struggling broker Merrill Lynch & Co. in late 2008—leaned on the Fed programs until May 2009.
Surprisingly, some of the biggest beneficiaries were foreign companies. Subsidiaries of Barclays Bank Plc, the British bank that bought the U.S. operations of bankruptcy Lehman Brothers in September 2008, borrowed more than $50 billion since 2008, according to Fed records.
Other European lenders benefiting from the Fed loans were Switzerland’s UBS AG and Credit Suisse Group, Germany’s Deutsche Bank AG, and France’s Societe Generale.
Another Federal Reserve financing service, termed the Commercial Paper Funding Facility, finances companies’ operations by giving them short term loans. Companies taking advantage of the commercial paper facilities include conglomerate General Electric Co., fast-food operator McDonald’s Corp., telecom firm Verizon Communications Inc., and motorcycle manufacturer Harley-Davidson.
Fed’s Role Questioned
“Over time, these programs helped to alleviate the strains and to restore normal functioning in a number of key financial markets, supporting the flow of credit to businesses and households,” the Fed said in a statement. The Fed said that such programs helped restore trust in the U.S. financial system and averted a much deeper recession.
But critics of the bailout have used the information release to voice their concerns over the government’s role in the financial crisis.
“How many big banks repaid Treasury Department bailouts in order to avoid limits on executive compensation received no-strings attached loans from the Federal Reserve?” questioned Sen. Bernie Sanders (I-Vt.), one of the most outspoken critics of the Fed’s bailouts during the financial crisis.
Sanders is calling for an investigation into whether the Fed loaned money to corporations at near-zero interest rates while lending cash to other governmental agencies and organizations at much higher rates.
“As a result of this disclosure, other members of Congress and I will be taking a very extensive look at all aspects of how the Federal Reserve functions,” Sanders said.
In a disclosure this week of more than 21,000 transactions, the Fed showed that the global business sector, from banks to major corporations, leaned heavily on borrowings from the bank during the financial crisis.
Top beneficiaries were large U.S. banks, including Citigroup Inc., Bank of America Corp., Morgan Stanley & Co., and Goldman Sachs Group Inc.
Lending was heavy in 2008 during the height of the crisis, and Bank of America—which bought the struggling broker Merrill Lynch & Co. in late 2008—leaned on the Fed programs until May 2009.
Foreign Beneficiaries
Surprisingly, some of the biggest beneficiaries were foreign companies. Subsidiaries of Barclays Bank Plc, the British bank that bought the U.S. operations of bankruptcy Lehman Brothers in September 2008, borrowed more than $50 billion since 2008, according to Fed records.
Other European lenders benefiting from the Fed loans were Switzerland’s UBS AG and Credit Suisse Group, Germany’s Deutsche Bank AG, and France’s Societe Generale.
Another Federal Reserve financing service, termed the Commercial Paper Funding Facility, finances companies’ operations by giving them short term loans. Companies taking advantage of the commercial paper facilities include conglomerate General Electric Co., fast-food operator McDonald’s Corp., telecom firm Verizon Communications Inc., and motorcycle manufacturer Harley-Davidson.
Fed’s Role Questioned
“Over time, these programs helped to alleviate the strains and to restore normal functioning in a number of key financial markets, supporting the flow of credit to businesses and households,” the Fed said in a statement. The Fed said that such programs helped restore trust in the U.S. financial system and averted a much deeper recession.But critics of the bailout have used the information release to voice their concerns over the government’s role in the financial crisis.
“How many big banks repaid Treasury Department bailouts in order to avoid limits on executive compensation received no-strings attached loans from the Federal Reserve?” questioned Sen. Bernie Sanders (I-Vt.), one of the most outspoken critics of the Fed’s bailouts during the financial crisis.
Sanders is calling for an investigation into whether the Fed loaned money to corporations at near-zero interest rates while lending cash to other governmental agencies and organizations at much higher rates.
“As a result of this disclosure, other members of Congress and I will be taking a very extensive look at all aspects of how the Federal Reserve functions,” Sanders said.
