Audit: Fed gave $16 trillion in emergency loans

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.

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.

Read more here.

In related news…

Banks Pay Back TARP Funds by. . .Borrowing From Treasury

Most of the big banks have repaid the government funds they received under the Capital Purchase Program (CPP), the pillar of TARP under which Treasury bought preferred shares in the nation’s banks. Enough so that, combined with dividends and sales of warrants, Treasury has declared that taxpayers have earned a profit on the CPP. Thus far, $245 billion has gone out, and $255 billion in repayments, interest and warrants has come back, yielding a profit to taxpayers of $10 billion. And there’s several billion more where that came from.

Read more here.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Advertise on End the Lie

Would you like to have your business or service exposed to thousands of people every day here at End the Lie? We have a wide variety of options available all at unbeatable prices. At the same time you will be supporting a truth-oriented alternative news outlet as well as hardworking independent journalists across the United States and the world.

If you would like to know more please email us and please be sure to include the details of what you are advertising, what your budget is and what type of advertising format you are looking for, including size(s), length of advertising period and any other pertinent details. The more information you give us, the more accurate the quote will be. We might also be able to work out some unique advertising tailored to your needs so feel free to contact us with questions and ideas.

Note: our advertisers have absolutely no input in what we cover or how we cover it. If this is problematic, you might want to seek out another news outlet. Here at End the Lie we put the truth first and thus no sponsor will be able to control our content. We reserve the right to refuse service to anyone and we will not advertise pornography, gambling, drugs, alcohol, tobacco or anything that might otherwise be illegal.