Fed Data Shows Foreign Banks Huge Beneficiaries of Emergency Lending Programs, Hedge Funds, McDonald’s, Harley-Davidson and Others Also Bailed Out

George Washington's picture

Washington’s Blog

Under orders from Congress pursuant to the Dodd-Frank financial
legislation, the Fed has finally released details of its emergency
lending starting in 2007.

As Bloomberg notes:

Bank of America Corp. and Wells Fargo & Co. were among the top borrowers from the Term Auction Facility [TAF]...


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 ...


Citigroup Inc. and JPMorgan Chase
& Co. also availed themselves of the TAF. Citigroup’s Citibank NA
subsidiary had three loans under the facility totaling $20 billion on
Jan. 15, 2009. JPMorgan’s JPMorgan Chase Bank NA had two loans totaling
$25 billion on Feb. 26, 2009.

Bloomberg notes that foreign banks borrowed heavily from TAF as well:

with headquarters outside the U.S. were among the first to begin using
the facility in December 2007 and were also among its heaviest
borrowers. These included the U.S. affiliates of banks such as Manama,
Bahrain-based Arab Banking Corp., Madrid-based Banco Santander SA, and
Paris-based Societe Generale SA. Beginning on June 18, 2009, Barclays
Bank Plc had two loans totaling $23.45 billion outstanding.

In a second article, Bloomberg points out
that despite Goldman's statements that it would have survived even
without help from the Fed, Goldman was a big borrower as well:

Sachs Goup Inc., which rebounded from the financial crisis to post
record profit last year, was a regular borrower from two emergency
Federal Reserve programs in 2008 and early 2009, new data show.


firm borrowed from the Fed’s Term Securities Lending Facility most
weeks from March 2008 through April 2009, data released by the Fed today
show. Two units of the New York-based firm borrowed as much as $24.2
billion from the Fed’s Primary Dealer Credit Facility in the weeks after
Lehman Brothers Holdings Inc.’s bankruptcy in September 2008, the data


Chief Executive Officer Lloyd Blankfein, 56, was quoted by
Vanity Fair last year as saying the company might have survived the
credit crisis without government help. The firm’s president,Gary Cohn,
was more definitive, according to the magazine: “I think we would not
have failed,” he was quoted as saying. “We had cash.”

Business Insider quotes the Fed to show that many banks tried to avoid the stigma attached to discount window borrowing by using the TAF program:

banks were reluctant to borrow at the discount window out of fear
that their borrowing would become known and would be erroneously taken
as a sign of financial weakness.


functioned as an overnight loan facility for primary dealers, similar
to the way the Federal Reserve's discount window provides a backup
source of funding to depository institutions. By providing a source of
liquidity to primary dealers when funding was not available elsewhere
in the market,

Business Insider also notes that, "Morgan Stanley, Citi, and Merrill were the biggest users of the PDCF [the Primary Dealer Credit Facility]."

CNBC points out that foreign banks used the PDCF as well:

addition to Barclays, BNP Paribas Securities , Daiwa Securities
America, Deutsche Bank Securities, Mizuho Securities USA, Dresdner
Kleinwort Securities and UBS Securities all received support from the

In a third article, Bloomberg reports that foreign banks were also among the biggest users of the Fed's emergency commercial paper facility:

U.S. subsidiaries of European financial institutions, led by
Zurich-based UBS AG and Brussels- based Dexia SA were among the largest
users of a government program to provide emergency short-term funding to
U.S. companies and banks during the credit crisis.


Six European
banks were among the top 11 companies that sold the most debt overall
to the the Commercial Paper Funding Facility. They sold a combined
$274.1 billion, according to data made public today by the U.S. central
bank. UBS sold $74.5 billion, the most among all borrowers. The largest
U.S.-based user was insurer American International Group, selling $60.2


UBS’s figure of $74.5 billion represents the company’s
total sales over the life of the program. The bank’s CPFF borrowings
peaked at $37.2 billion, an amount the firm rolled over, or re-sold at
maturity, once. Other companies rolled over debt in the program as well.

Huffington Post is providing an excellent live-blogging round up as new discoveries are made from the Fed's data release. Here are some of the more interesting insights:

funds, hedge funds and bond funds borrowed more than $71 billion from
the Fed's Term Asset-Backed Securities Loan Facility, the WSJ reported.
This includes $7.1 billion borrowed by the massive bond fund PIMCO, run
by veteran investor Bill Gross. Gross's involvement in the details of
the bailout, which included a campaign for public-private partnerships to unwind toxic assets, raised more than few eyebrows from critics.




European Megabanks Got A Windfall From The Fed ... Two European
megabanks -- Deutsche Bank and Credit Suisse -- were the largest
beneficiaries of the Fed's purchase of mortgage-backed securities. The
Fed's dollars also flowed to major American companies that are not
financial players, including McDonald's and Harley-Davidson, through
unsecured short-term loans.




Wall Street firms teetering
on the verge of collapse pledged more than $1.3 trillion in junk-rated
securities to the Federal Reserve for cheap overnight loans....

fact that Wall Street was able to pledge junk to the Fed in exchange
for cheap financing is likely to enrage lawmakers who view the Bush and
Obama-era crisis programs as largely benefiting Wall Street while
"Main Street" has been left behind.

Adding insult to the perceived
slight, banks have ramped up their requirements for new loans to
borrowers, making it ever more difficult for cash-strapped households
and businesses to take out new commitments.

Zero Hedge reports
that California pension giant Calpers was the largest user of the TALF
program, and that hedge funds and foreign central banks were also big
users of the Fed's emergency programs:

  • Looking at the TALF data, we see that the biggest borrower by subscription is Calpers, with a total of about $5.4 billion
  • More
    curiously, now disgraced and embroiled in an insider trading scandal
    hedge fund FrontPoint seems to have been a very active borrower on the
    TALF facility, having received $4.136 billion on subscription, the bulk
    of it going to a FrontPoint Michigan Strategic Partnership Investment
    entity, which has borrowed $2.6 billion
  • Foreign central bank borrowings
    • ECB [European Central Bank] - 271 borrowings for gross rolling total of just over $8 trillion.
  • SNB [Swiss National Bank] - 114 borrowings, for a gross rolling total of $465 billion
  • BOE [Bank of England] - 81 borrowings for a gross rolling total of $918 billion


Huffington Post also reports that many of these banks borrowed at ridiculously low interest rates.

Karl Denninger argues that
the fact that the Fed took stock in two of AIG's largest foreign
insurance subsidiaries violates Section 14 of the Federal Reserve Act,
which prohibits the Fed from taking an equity interest in a company
irrespective of the means or terms.

While Bank of America and Wells Fargo were the biggest TAF recipients, AP reports that - when total government loans and aid are added up - other American banks borrowed much more:

documents show that the most loan and other aid for U.S. 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).

it may be too early to call the horse race in terms of totals and
rankings for emergency loans and aid to the banks. Because of the way
that the Fed presented the data, there is a possibility of
double-counting across different program categories, or failing to take
into account that loans were repaid and then new loans taken out. So
it may take a couple of days for a definitive analysis.

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SmittyinLA's picture

Where's the Calpers link, and why did they need or want to borrow 5.4B?

Not Sure's picture

I'm betting this will not be as big as the new Black Swan film.

sgorem's picture


sgorem's picture

George Washington, " PAPER MONEY RUINS COMMERCE, OPPRESSES THE HONEST, AND OPENS THE DOORS TO EVERY SPECIES OF FRAUD AND INJUSTICE".  unquote............................                                   

onlooker's picture

Everybody is loaned money but the US worker. The unemployed only want a paycheck for working their rear end off for 8 or 10 hours a day. They want to EARN honest wages. By having a JOB. They need jobs. America needs jobs. They WANT to work, not steal like the financial institutions.




The only question left is stoning, hanging or burned at the stake. Maybe drawn and quartered. Shall we preserve the Democracy and have a vote?

Not Sure's picture

Keep your eye on the ball. Where is it? What is the ball and who has it?


On another note, I wonder what 12/7 will be like now?


Not Sure's picture

"Note" That's a good one. I crack myself up.

Buck Johnson's picture

This is outragous, they made sure to have this come out after the elections didn't they. 

cdskiller's picture

Well, I am shocked. Shocked! Jackie Calmes of the Times was outraged when I accused her of lying for saying that the banks had payed back, with interest, all the financial aid they had recieved from the federal government.

Violetta's picture
Violetta (not verified) Dec 1, 2010 8:50 PM

I still don't really understand QE. I;ve been reading the posts here for a few weeks, trying to understand what the government is doing.  It's very confusing, even with the xtranormal video! Anyone with basic common sense can see that inventing money is not going to do anything about basic problems, but I would like to try to understand the rationale.  Is the idea that the Fed credits itself with money, then lends that to banks, and then the banks...what then?  What is the point?  Everyone here says the idea is to make the stock markets go up.  But how does that happen?  Why does printing money enable the stock market to go up? 

minus dog's picture

They're "printing" money to lend to the government, primarily.  That trillion dollar deficit has to come from somehere, even if it's on paper and they're pulling the money out of their ass.  Which they are, of course.

At the most basic level, it drives the markets up the same way it makes everything else go up.  Look at a chart of the S&P or Dow, but priced in gold or silver instead of dollars.  The powers that be know that most people simply look at the market indicies going "up" and equate that with good news.

Other posters will no doubt have many other mechanisms by which they can fuck with the market.

Furthermore, at another basic level, printing boatloads of money can help people who have a mountain of debt.  Who has a mountain of debt?  The government, of course.  Short story - exhibit A: Zimbabwe.

There are plenty of other "benefits" from the standpoint of the government, too.

You ask "What is the point", but really this one of the big reasons they chose a fiat currency in the first place - so they can print like mad. 

Violetta's picture
Violetta (not verified) minus dog Dec 1, 2010 10:29 PM

Thanks.  So that's why the Fed is buying the Treasury bills?  So the government runs a tab, and the Fed invents the money, and gives the government the invented money.  I don't understand why more people aren't upset by this.  Isn't this obviously a bad idea?  I mean, not dealing with reality is always a bad idea.  How can the government say with straight face that it is going to reduce the deficit while at the same time printing money to pay for its expenses?  Why even have a deficit commission?  I mean, that's ridiculous.  Cut off this and that from the budget, and then the next week, one of these POMOS you are all talking about?  That's what a POMO is?  The Fed invents money and lends it to the government?  Hello, Marx brothers.

Everybodys All American's picture

These Fed governors better have an exit plan out of the US when this all blows up. I for one have no pity for these fools.

gasmiinder's picture

They don't need your pity.  They own your ass.


Understand that the Fed is owned by the banks (literally).  The Fed has absolute power over our financial system and we are not allowed to even know what they are doing.  Whenever the idea of looking to see what they are doing is advanced your purported representatives run for the nearest hole to hide. 


It's over dude - the bankers are the masters and we are the slaves.  Only a fool believes he is free in the US today, that there is any reason to expect retribution to occur, or that the masters need to fear the slaves.

MyKillK's picture

No mention that almost a Trillion in MBS were bought from European banks? $600 Billion alone from deutsche Bank and Credit Suisse alone.

williambanzai7's picture

Deutsche Bank?


I thought Germans had nothing to do with creating the crisis....

Gloomy's picture

Maybe someone at the Fed does get it?

December 1, 2010 Too Big to Succeed




Kansas City, Mo.

THE world has experienced a severe financial crisis and economic recession. The Treasury and the Federal Reserve took actions that saved businesses and jobs and may very well have saved the economy itself from ruin. Still, the public seems ungrateful, expressing anger at these institutions that saved the day. Why?

Americans are angry in part because they sense that the government was as much a cause of the crisis as its cure. They realize that more must be done to address a threat that remains increasingly a part of our economy: financial institutions that are “too big to fail.”

During the 1990s, Congress, with encouragement from academics and regulators, repealed the Glass-Steagall Act, the Depression-era law that had barred commercial banks from undertaking the riskier activities of investment banks. Following this action, the regulatory authority significantly reduced capital requirements for the largest investment banks.

Less than a decade after these changes, the investment firm Bear Stearns failed. Bear was the smallest of the “big five” American investment banks. Yet to avoid the damage its failure might cause, billions of dollars in public assistance was provided to support its acquisition by JPMorgan Chase. Soon other large financial institutions were found to also be at risk. These firms were required to accept billions of dollars in capital from the Treasury and were provided hundreds of billions in loans from the Federal Reserve.

In spite of the public assistance required to sustain the industry, little has changed on Wall Street. Two years later, the largest firms are again operating with bonus and compensation schemes that reflect success, not the reality of recent failures. Contrast this with the hundreds of smaller banks and businesses that failed and the millions of people who lost their jobs during the Wall Street-fueled recession.

There is an old saying: lend a business $1,000 and you own it; lend it $1 million and it owns you. This latest crisis confirms that the economic influence of the largest financial institutions is so great that their chief executives cannot manage them, nor can their regulators provide adequate oversight.

Last summer, Congress passed a law to reform our financial system. It offers the promise that in the future there will be no taxpayer-financed bailouts of investors or creditors. However, after this round of bailouts, the five largest financial institutions are 20 percent larger than they were before the crisis. They control $8.6 trillion in financial assets — the equivalent of nearly 60 percent of gross domestic product. Like it or not, these firms remain too big to fail.

How is it possible that post-crisis legislation leaves large financial institutions still in control of our country’s economic destiny? One answer is that they have even greater political influence than they had before the crisis. During the past decade, the four largest financial firms spent tens of millions of dollars on lobbying. A member of Congress from the Midwest reluctantly confirmed for me that any candidate who runs for national office must go to New York City, home of the big banks, to raise money.

What can be done to remedy the situation? After the Great Depression and the passage of Glass-Steagall, the largest banks had to spin off certain risky activities, and this created smaller, safer banks. Taking similar actions today to reduce the scope and size of banks, combined with legislatively mandated debt-to-equity requirements, would restore the integrity of the financial system and enhance equity of access to credit for consumers and businesses. Studies show that most operational efficiencies are captured when financial firms are substantially smaller than the largest ones are today.

These firms reached their present size through the subsidies they received because they were too big to fail. Therefore, diminishing their size and scope, thereby reducing or removing this subsidy and the competitive advantage it provides, would restore competitive balance to our economic system.

To do this will require real political will. Those who control the largest banks will argue that such action would undermine financial firms’ ability to compete globally.

I am not persuaded by this argument. History suggests that financial strength follows economic strength. A competitive, accountable and successful domestic economic system, supported by many innovative financial firms, would restore the United States’ economic strength.

More financial firms — with none too big to fail — would mean less concentrated financial power, less concentrated risk and better access and service for American businesses and the public. Even if they were substantially smaller, the largest firms could continue to meet any global financial demand either directly or through syndication.

Crises will always be a part of our capitalist system. But an absence of accountability and blatant inequities in treatment are why Americans remain angry. Without accountability, we cannot hope to build a national consensus around the sacrifices needed to eliminate our fiscal deficits and rebuild our economy.


Thomas M. Hoenig is the president of the Federal Reserve Bank of Kansas City.


williambanzai7's picture

Well written, it is sitting in Benrons parrot cage ;-)

Happy Days's picture

IMHO...this is just FEDSpeak....believe it at your own risk. Can one really trust a central bank considering their history? It's a joke....

MGA_1's picture

Darnit, why couldn't I have been close to destabilizing the financial system !!

Racer's picture

I have been a very law abiding citizen all my life, always did what I thought was the right thing to do, now...

I see it was the WRONG thing to do, and that makes me very angry. I do not want to obey any laws, why should I! They don't, I don't care any more if I will be put in prison when I am a pensioner, I will be given free food and free heating and have people check on me regularly. So when I am old enough, please mummy and daddy can I have a prison cell please for xmas because I have no money left because the bankstas robbed me?

ebworthen's picture

I feel the same way.

minus dog - What is that 11th commandment? 

Hook Line and Sphincter's picture

Thou shall not make love to Ben Bernanke.

minus dog's picture

Seems like a lot of people forgot about the 11th commandment.  It's going to make a big comeback with the middle class, and the former middle class.

Milestones's picture

This kind of shit should not be allowed to be swept under the rug. KINA, good post and right on the button. WE are still the sovereigns and owners of this country and it is way past due that the owners of this country start acting like owners and not some low life serfs.

F%#& these overblown two bit street punks. Christmas gifts should include some stout rope. We need to se some dancin feet.    Milestones 

Seasmoke's picture

and just think of all the the worthless HELOC loans that BOA and WF has on the books at full value........mark to fantasy !!!

LiquidBrick's picture

Yep. Northfork lend $200,000 HELOC to someone I know very well in 2007. Then GreenPoint bought out NorthFork. Then CapitalOne bought out GreenPoint. Then BAC bought the HELOC paper which is now worth $0.

steve2241's picture

This report states that 9 TRILLION dollars in overnight loans were made to a handful of U.S. financial institutions. 2,2 trillion to Merrill Lynch alone! http://www.wibw.com/nationalnews/headlines/Fed_made_9_trillion_in_emerge... This information came through on the bottom of the screen on CNN a few moments ago. I had to Google "Fed 9 trillion". I thought it was in regards to the last 24 hours and they had given the ECB a blank check to bailout everyone - core and periphery!

docsdoc's picture

Time for Ron Paul to begin congressional hearings.  Demand the truth - Audit the Fed!  END THE FED!

Kina's picture

If I employ a manager to run all my affairs for me nobody would accept that this manager could deny me full and immediate access to all things relating to my affairs that he is doing.


Electing governments and Presidents is the same. You elect them to manager the affairs of YOUR country for you. However you have fight tooth and nail to get the slightest bit of truthful information from them concerning the affairs you elected them to manage.


Do people have much respect for Congress and the office of President or is it just a sick joke, and we all know and take it for granted they are their to scam their powers to syphon off the public into the hands of the corporate elite?

Kina's picture

Hallellujah,.... if there was ever any question of whether the Federal Reserve Bank has ever violated its fiduciary duty to the United States of America (and it has) is put to rest and Congress is legally, ethically, morally, and Constitutionally required to revoke the charter of the Federal Reserve Bank and reverse the Federal Reserve Act of 1913.  


There will be no impetus for Congress to do anything until they have pitchforks and nooses at their door. Only then they will turn on their masters.


Duuude's picture


NotApplicable's picture

But they earned it!

That they did it by fees from processing each other's bail-out paper is immaterial. </sarc>

spongeBOB's picture

And BAC was up>3% on the news. C'mon wiki, release the fawkin docs. I hope whatever gets released implicates the Fed or Timmy. Please Santa I want nothing more this xmas but to see one of those MoFo take it up the a$$.

Buttcathead's picture

So when does AAPL hit $400  ?

Buttcathead's picture

Hooray !!!  for free market capitalism !!!

moneymutt's picture

A lot of folks were whining that this partial audit was a sell-out compared to what was proposed or a complete shut down of the FED...but this information is extremely useful, and it will lead Congress and people to ask for more....I think they did right thing, right compromise to get Audit FED bill passed. We shouldn't have to hope for a brave whistle blower to hand this information over to a guy being charged with rape that has a web-stie that is shut down...its our govt, we should get this information because we freaking want it, and of course, the insiders had good (for them) reasons to keep this info hidden.

Getting this info is a win for democracy and it took bi-partisan populists in Congress to get it.

Traianus Augustus's picture

It should be good for guillotine makers too!!!

f16hoser's picture

This government will do anything to keep the lie alive. Junk backed by Junk = Junk! This really is the Twilight Zone!

New Revolution's picture

Hallellujah,.... if there was ever any question of whether the Federal Reserve Bank has ever violated its fiduciary duty to the United States of America (and it has) is put to rest and Congress is legally, ethically, morally, and Constitutionally required to revoke the charter of the Federal Reserve Bank and reverse the Federal Reserve Act of 1913.    A complete audit of the books is now in order and if anything is out of place criminal and civil proceedings must begin against any and all persons who benefited from their actions and interests.

God I'm glad that's out of the way.    This should give the networks something to report about for at least a year.   The second year will be the criminal parade of politicians who investigations aided and abetted the central banks thefts.

Welcome to the New American Revolution.    I just hope we lead it instead of the Irish.

Cdad's picture

It would be nice to get a ZH lawyer to weigh in on this subject.  I share with you a passion for the take down on this criminal element within our nation.  It needs to be stopped.

But if you are waiting for the press to break this story....well, I'm not going to hold my breath on that one.  Even if you were to shift it over to Fox, where they at least believe in a vetting of sides, I'm not sure anyone there has the moxy to take on the Fed.  Wish it were true, however.

Jean Valjean's picture

It's nice to dream.

Media take on this will be:  Look how perfectly this world saving action, which benefitted all people, was executed by the master minds.

NotApplicable's picture

Not to mention that the Fed has no fiduciary duty to anyone but themselves. All they have is a fuzzy "dual-mandate." Even if it did, Bennie has full immunity by being on the board of the BIS. There is not a single entitity in the world with any legal standing that can bring charges against him.

dizzyfingers's picture

Are the reserve banks not monopolies, those entites that are anathema in the US? Remember AT&T?

Hey Assholes's picture

Its time to shoot the bastards. Then we shall have justice.

ebworthen's picture

Shooting is too quick and merciful.

Clapham Junction's picture

I don't know about that, but I like your name.