Bloomberg News has researched a bombshell story, the Federal Reserve gave $1.2 trillion in secret loans to banks during the financial crisis, from August 2007 until April 2010. This is in addition to the TARP bail outs which was publicly known.
The $1.2 trillion peak on Dec. 5, 2008 -- the combined outstanding balance under the seven programs tallied by Bloomberg -- was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.
The top three banks at peaking borrowing are: Morgan Stanley, $107.3 billion, Citigroup took $99.5 billion, Bank of America $91.4 billion, or a total of $298.2 billion. Gets worse, foreign banks amounted to half the loans.
Half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland Plc, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS AG (UBSN), which got $77.2 billion. Germany’s Hypo Real Estate Holding AG borrowed $28.7 billion, an average of $21 million for each of its 1,366 employees.
Bloomberg had filed a Freedom of Information act in 2008 to find out the details on these loans. They finally won to be presented with 21,000 transactions and massive amounts of data to crunch. The above article overviews the results of their long battle and investigation. They have created a website with interactive data from their research results. Below is one image from Bloomberg's Data Presentation Site:
The below Bloomberg interview is where Robert Litan calls the TBTF banks Aristocracy, as if borrowing money on incredible terms, making fast profits on carry trade or any other fast buck scheme is a way to prop up anything. He's right though, it's an astounding amount of money to keep these crappy institutions afloat.
Think about it, while people are foreclosed on with no help in sight and none reall to this day, we had another secret bailout happening to the tune of $1.2 trillion, with half of it bailing out banks not even incorporated in this nation.
Bloomberg did a lot of work for this story and corresponding research, so to really get the details click anyone of the links above.