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Federal Reserve Audit
Federal Reserve reveals trillions dished out to world banks to aid financial crisis... including $1.5trillion to British banks
By Daily Mail Reporter
Last updated at 12:01 PM on 2nd December 2010
Comments (19) Add to My Stories $3.3trillion handed to financial institutions
$1.25trillion given to help housing market
The Federal Reserve has revealed details of the trillions of dollars it gave in emergency aid to U.S. and foreign banks during the financial crisis.
New documents show it paid out a staggering $1.5trillion (almost £1trillion) to British banks - over a third of the total money lent - in an effort to prop up the financial sector.
The Fed dished out $2.2trillion to banking giant Citigroup, $2.1trillion to Merrill Lynch and $2trillion to Morgan Stanley.
In addition, payments have also be made to Bear Stearns ($960billion), Bank of America ($887billion), Goldman Sachs ($615billion), JPMorgan Chase ($178billion) and Wells Fargo ($154billion).
Lending: The U.S. Federal Reserve lent some $3.3trillion to financial institutions - and over $1trillion, or £640million, to British banks
And foreign banks who benefited from the Fed's aid included European Central Bank, Bank of England and the Bank of Japan as well as Swiss bank UBS, which borrowed more than $165billion, Deutsche Bank ($97billion) and the Royal Bank of Scotland ($92billion).
The documents serve as a reminder of how crippled the financial system had become during the crisis and how much it's recovered since.
Banks earned $14billion from July through to September this year, showing that the green shoots are definitely showing.
Green shoots? Banks earned $14billion from July through to September this year, showing that there are signs of improvement from the financial crisis
Large non-banking U.S. companies which borrowed from the Federal Reserve included General Electric,
who used a total of more than $16billion,
Harley-Davidson $2.3billion and a group of independent Caterpillar dealers $733million.
In all the Fed disclosed more than 21,000 transactions, totalling $3.3trillion to financial institutions, which was required under the new financial laws.
'The system basically failed because banks stopped lending to each other,' said Paul Miller, a banking analyst at FBR Capital Markets.
'After Lehman failed ... the Fed essentially opened the floodgates and pushed as much liquidity into the system as possible. And it worked. It helped stabilize the system.'
The Fed also detailed the $1.25trillion in mortgage securities it bought from Fannie Mae and Freddie Mac to help drive down mortgage rates, ease credit and provide some support to the crippled housing market.
'There's very much a sense from the data that the Federal Reserve was not just providing liquidity to U.S. banks but was creating stability for the entire world's financial system,' said Linus Wilson, assistant professor of finance at the University of Louisiana, who has studied the financial crisis.
Explore more:People: Paul Miller Organisations: European Central Bank
Exactly how do you figure that?!
Governments around the world are apparantly playing power games and playing fast and loose with our money and you want to point fingers in one direction and narrow it down to one supposed cause. I think that's being VERY naive.
- Heather K., Augusta, GA US, 02/12/2010 22:28
Make no doubt about it, all this extra liquidity will be moulded shaped and pushed around earning all these institutions masses in fees.
It will create inflation and that will depreciate that debt as well as depreciate our savings, but these financial institutions will be the ones receiving the benefits of reallocations due to inflation.
Savers should have been getting HUGE rates of interest from the banks during the crash, yet we ended up getting ZERO because of all the cash being thrown around.
Savers are the silent victims, the prudent ones.
- Geezer, London, 02/12/2010 21:04
And where, exactly, did the Federal Reserve get all the money that it handed out? Did it print it in the basement? And what are the terms of the loans?
- kenn, toronto,canada, 02/12/2010 20:55
- Conrad Jones, Cheam, 02/12/2010 19:56
The americans didn't sacrifice anything for us. If you do your research you will find that the USA sent out there own people on the Lusitania (cruise ship) deliberately into german waters where they knew it would be sunk. THEY SENT 1,198 OF THEIR PEOPLE TO DIE IN ORDER TO GIVE THEM AN EXCUSE TO JOIN IN WORLD WAR 1 IN ORDER FOR THE BANKS TO PROFIT FROM THE WAR. MONEY EQUALS POWER.
REMEMBER INTEREST IS THE ROOT OF EVIL AS THE COUNTRY WILL FOREVER BE IN DEBT TO THE BANKS WHO SUPPORTED EVERY WAR!
- the truth, somewhere, 02/12/2010 20:28
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@Angel Eyes
I fully appreciate your need to blame someone for this crisis.
It would be a mistake to blame this on any one Nation. Blame the American People for the financial crisis if you like but do not forget the sacrifices they made for the UK during World War I & II.
Your focus should be drawn to the Federal Reserve (and it's share holders) as well as other Central Banks - including the Bank of England and Gordon Brown.
- Conrad Jones, Cheam, 02/12/2010 19:56
Holy criminal male bovine poop, Batman!! Rep Ron Paul, Tx, has offered a bill repeatedly to audit the Fed. What say we make an all out push to make that happen so we finally get the "transparency" so far withheld at least in this one small area.
All that fiat money was used to shore up a house of cards that will not withstand a good breeze anyway. It delayed the inevitable--at best. At worst, it will make the inevitable far worse than it would have been. And all this in the pursuit of "global governance" and "redistribution of wealth".
All us "rich people" (that's anyone in the "first world" with a job) have too much, doncha know. Be sure to send thanks to Those Who Know Everything. They no longer want the power to control merely a country or two or a continent or two, but the whole world and that takes a great deal of money.
- empty pockets, ABQ, NM, USA, 02/12/2010 19:45
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