2nd UPDATE: Fed Unveils More Details Of Crisis Loans
July 06 2011 - 5:03PM
Dow Jones News
Goldman Sachs Group Inc. (GS) took the biggest single sum and
was given the best rate on two Federal Reserve loans in December
2008, the latest disclosure of the central bank's controversial
actions at the height of the financial crisis showed.
Following a Freedom of Information Act request by Bloomberg
News, the Fed Wednesday disclosed the details of 28-day loans made
to the biggest Wall Street firms from March to December 2008. This
short-term lending program to banks, known as single-tranche term
repurchase agreements, peaked at $80 billion in April 2008, a month
after the collapse of Bear Stearns, which marked the prelude to the
crisis.
The overall amounts of this lending program had been disclosed
but details about individual banks' borrowing had not. Goldman
Sachs Group Inc., Credit Suisse Securities, Barclays Capital and
RBS Securities were among the banks that took advantage of the
low-rate loans.
Goldman took the biggest loan on Dec. 9, 2008, borrowing $15
billion at a 1.16% rate, the Fed said. Borrowing rates were as low
as 0.01% for a $200 million Goldman loan on Dec. 30, and as high as
3.76% for a $10 billion loan to RBS on Oct. 7.
Though Goldman took the biggest single loan, its $53.4 billion
total was lower than what other banks borrowed from the repurchase
open market operations. Two foreign banks were the main users:
Credit Suisse tapped the Fed 57 times for a total of $259.3
billion, while Deutsche Bank got $101 billion by going to the U.S.
central bank 37 times.
The Fed has been forced to disclose the details of its
controversial lending practices and rescue efforts during and in
the aftermath of the financial crisis following scrutiny by
Congress and lawsuits brought about by media companies. Critics
have assailed the Fed for helping Wall Street banks and supporting
American International Group Inc. (AIG) at taxpayers' expense, but
the central bank has rebutted the rescues avoided a bigger economic
collapse.
"These operations were conducted through competitive auctions
with primary dealers in an open and transparent manner," a New York
Fed spokesman said of the latest disclosures. "This program helped
to alleviate strains in financial markets and support the flow of
credit to U.S. households and businesses," he added.
A spokesman for Goldman Sachs declined to comment. Credit Suisse
and Deutsche Bank were not immediately available for comment.
At the end of 2010, the Fed was forced by the Dodd-Frank
financial law to lift the veil of secrecy on nearly all the $3.3
trillion worth of credit it funneled to different parts of the
economy and the financial system during the crisis. That was
followed by a March disclosure of the loans made directly to banks
under the Fed's discount-window, following lawsuits from Bloomberg
L.P.'s Bloomberg News and News Corp.'s (NWSA, NWSB) Fox Business
Network.
Details of the latest Fed disclosure can be found at:
http://www.federalreserve.gov/monetarypolicy/bst_tranche.htm
-By Luca Di Leo, Dow Jones Newswires; 202-862-6682;
luca.dileo@dowjones.com
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