Federal Reserve Criticized for Lending Secrecy

May 26th, 2011 at 9:51 pm | 4 Comments |

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Huffington Post reports:

In the midst of the global financial crisis in 2008, the Federal Reserve lent Goldman Sachs, Credit Suisse and Royal Bank of Scotland at least $30 billion each at interest rates as low as 0.01 percent with no public disclosure of the details, Bloomberg News reported on Thursday.

The latest revelations about the covert infusions of credit provided by the Fed to some of the world’s largest banks has amplified accusations that the central bank is a power unto itself, operating according to its own devices and in the interest of major financial institutions — and beyond accountability to taxpayers.

“It just points out that this was about secrecy to protect banks basically from embarrassment from transparency, which is not supposed to be what the Fed’s about,” said Dean Baker, co-director of the Center for Economic Policy and Research, in Washington.

“That is the fundamental problem with the Fed,” Baker added. “They’re supposed to be an agency of the government, not an agency of the banks. But reflexively, there they are protecting the banks, again and again and again.”

Some experts say that the Fed acted properly to withhold details of the transactions, asserting the broader financial system might well have been spooked had it been known to what degree the central bank was propping up major lenders.

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4 Comments so far ↓

  • valkayec

    If anyone had been paying attention to the NYT and the FT financial pages, this would not be “new” news. It was reported months ago. When the credit market froze up world wide as a result of the Wall St. crash, the Fed was the only place offering cheap money to companies and banks worldwide to keep them going. So the Fed lent generously to keep operations going, payrolls met, supplies paid, and money rolling. No other country, outside of China which apparently chose not to engage, had the ability to involve itself in sustaining the world economy. That’s the benefit – and the PR loss – of having the world’s reserve currency. Unfortunately, only big companies and large banks were able to partake of the Fed’s generosity. Small and new businesses and banks were left to their own meager devises.

  • SqueekyFromm

    Yeah, privacy is kinda nice if you want to loan hundreds of billions to foreign banks. I guess that is why when he was in one of those hearings, he wasn’t sure where $500 Billion had gone.

    Squeeky Fromm
    Girl Reporter

    • valkayec

      Just out of curiosity, I wonder if you know how sarcastic and angry you sound through your writing. Maybe you do and that’s the point. I don’t know. I just wonder if that’s the temperament you mean to convey all the time.

      • SqueekyFromm

        On a lot of this Economy stuff I am angry. Extremely so. We (the 99%) are being screwed over by the 1% and the government far far worse than most people can even conceive. I did a Internet Article yesterday on my Economy website about how Wall Street exercises DROIT DU SEIGNEUR rights over all of us using oil speculation as a example. Then WHAM, today some wikileaks stuff comes out confirming this in a big way. I added it to mine as a UPDATE at the bottom:

        http://squeekonomics.wordpress.com/2011/05/26/droit-du-seigner-cherry-popping-on-wall-street/

        All this FED stuff is making stuff even worse and if you look at the results, the only benefit seems to be a bubble in stock prices:

        http://market-ticker.org/akcs-www?post=187016

        I have plenty of humor in my other websites, but on the Economy stuff it is hard for me not to be angry and sarcastic sometimes.

        Squeeky Fromm
        Girl Reporter