The US Federal Reserve has revealed details of trillions in emergency aid it gave to US and foreign banks and to non-bank companies ranging from General Electric to Harley-Davidson during the financial crisis.
The Fed detailed more than $2 trillion it lent through eight programs from December 2007 to July this year to ease a credit crisis. It came at a time when the financial crisis had caused credit to virtually dry up, sidelining companies and municipalities in need of short- term cash. The credit clog worsened the deepest recession since the Great Depression.
New documents show that the most loan and other aid for US institutions over time went to Citigroup ($2.2 trillion), followed by Merrill Lynch ($2.1 trillion), Morgan Stanley ($2 trillion), Bear Stearns ($960 billion), Bank of America ($887 billion), Goldman Sachs ($615 billion), JPMorgan Chase ($178 billion) and Wells Fargo ($154 billion). Merrill Lynch was later acquired by Bank of America, while Bear Stearns collapsed and was sold to JPMorgan.
Foreign banks also benefited from the Fed's aid. They included Swiss bank UBS, which borrowed more than $165 billion, Deutsche Bank ($97 billion) and the Royal Bank of Scotland ($92 billion).
The documents are a reminder of how crippled the financial system had become during the crisis and how much it's recovered since.
Banks earned $14 billion from July through September this year. Many of the individual loans the banks took were worth billions and had short durations but were paid back and renewed many times.
Among the largest recipients were foreign central banks, such as the European Central Bank, Bank of England and the Bank of Japan. They borrowed huge amounts of dollars from the Fed to assist their own banks.
Large non-banking companies in the US used the Fed's lending programs, too. They did so to pay employees or suppliers or to make loans through their subsidiaries, because private financing had all but evaporated. Over time, GE borrowed a total of more than $16 billion, Harley-Davidson $2.3 billion and a group of independent Caterpillar dealers $733 million.
Two other recipients were the California State Teachers Retirement System and the City of Bristol (Conn) General City Retirement Fund.
The Fed released the data in the form of more than 21,000 transactions. The disclosures are required under the financial overhaul law. The Fed's programs were credited with helping restore the health of individual banks and stabilise the financial system.
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