Fed Names Recipients of $3.3 Trillion of Aid During U.S. Financial Crisis (Bloomberg)
By - Dec 1, 2010 1:27 PM MT
Bank of America Corp. and Wells Fargo & Co. were among the biggest borrowers from one Federal Reserve program, the Term Auction Facility, with as much as $45 billion apiece. Photographer: Andrew Harrer/Bloomberg
Bank of America Corp. and Wells Fargo & Co. were among the top borrowers from the Term Auction Facility, one of the Federal Reserve’s first and longest-lasting efforts to combat the financial crisis.
Bank of America had three loans for $15 billion each outstanding from the facility as of Jan. 15, 2009, while Wells Fargo had three loans for $15 billion each on Feb. 26, 2009, according to documents released today by the Fed to comply with orders from Congress to identify recipients of emergency aid.
Fed Chairman Ben S. Bernanke created the TAF in December 2007 to let banks obtain cheaper funding without risking the stigma of loans from the central bank’s discount window. Under the program, banks bid for Fed loans at a rate determined through auctions. Borrowing peaked at $493.1 billion in March 2009 and began declining until the TAF closed in April 2010.
Because the program lent to banks, the Fed didn’t invoke an emergency legal clause allowing borrowing by non-banks in “unusual and exigent circumstances.” The central bank used the provision in 2008 to set up loan facilities for investment banks, money-market mutual funds and corporations.
“The funding and guarantee programs were an example of a successful government initiative at no taxpayer expense,” said Robert Stickler, a spokesman for Charlotte, North Carolina-based Bank of America. “The programs enabled the U.S. financial system to continue to operate, preventing a recession from becoming much more severe.”
READ FULL POST HERE
No comments:
Post a Comment