The Fed gave banks $1.2 trillion
A Freedom of Information Act request put together by Bloomberg has allowed for the hard numbers to finally be made available to the public about the loans the Fed dished out to keep financial firms afloat in the midst of an economic collapse.
The Federal Reserve has refrained from disclosing info on the loans, which began in August 2007, and as one economics professor told Bloomberg, “was supposed to be secret and never revealed.” The Fed argued in court for two years that revealing the names and terms of borrowers and their loans would damage stocks, and some of the biggest banks involved asked the US Supreme Court last year to withhold some of the information. The Fed attested that revealing the secretive loans to the public, or even being disclosed to the Government Accountability Office, would expose the weakness of the American economy. Nonetheless, their appeal was declined and data released, at nearly 30,000 pages, shows 21,000 transactions occurring over the course of three years.
Now, at least, the world knows that long-standing secret that the economy was in trouble.
“These are all whopping numbers,” Robert Litan, a former Justice Department official, tells Bloomberg. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.” Bloomberg notes that $1.2 trillion is also around how much money US homeowners owe on over 6 million delinquent and foreclosed mortgages.
Of the banks involved in the loans, Morgan Stanley was the biggest of borrowers, taking in over $107 billion. Citigroup received $99.5 billion and Bank of America $91.4 billion, reads the report. The Fed says that they suffered no credit losses as part of the program, and actually brought in around $13 billion in interest in fees between August 20007 and December 2008.