Secret's out: Federal Reserve reveals who got help in midst of financial crisis
The Federal Reserve Board on Wednesday posted detailed information about more than 21,000 individual transactions that provided $3 trillion in liquidity to stabilize markets during the nation's financial crisis.
The Fed said many of the transactions, conducted through a variety of broad-based lending facilities, provided liquidity to institutions and markets through fully secured, mostly short-term loans.
An analysis of the data by The Wall Street Journal showed Goldman Sachs used an emergency overnight loan program from the Fed 84 times for a total of nearly $600 billion. The Primary Dealer Credit Facility, announced in March 2008, was used 212 times by Morgan Stanley, the WSJ said.
The data provided insights about how major U.S. commercial and investment banks relied on the special funding programs like the Term Auction Facility for emergency loans in the depths of the crisis. Citigroup used the Term Auction Facility 26 times; MetLife Bank used it 19 times; and Bank of America tapped into the facility 15 times, but JPMorgan Chase used TAF only seven times. The last TAF auction was held March 8, according to the WSJ.
The data shows the wide breadth of the financial crisis and how it extended far beyond Wall Street to bedrock corporations, according to The New York Times.
The Federal Reserve was required to release the data on who received loans and other financial aid under the Dodd-Frank Wall Street Reform and Consumer Protection Act that was signed into law in July. The requirement to release the data was designed to promote transparency while protecting monetary policy independence and the efficacy of the Fed’s liquidity programs.
The Federal Reserve said in its release of data that "purchases of agency mortgage-backed securities supported mortgage and housing markets, lowered longer-term interest rates and fostered economic growth." For agency MBS transactions, details include the name of the counterparty, the security purchased or sold, and the date, amount and price of the transaction.
Some transactions provided liquidity to particular institutions whose "disorderly failure" could have severely stressed an already fragile financial system, the Federal Reserve said in announcing the data release.
“As financial conditions have improved, the need for the broad-based facilities has dissipated, and most were closed earlier this year,” the central bank said.
The Fed said it followed sound risk-management practices in administering the programs, incurred no credit losses on programs that have been wound down, and expects to incur no credit losses on the few remaining programs.
The information can be downloaded in multiple formats. The site also provides explanations of each program as well as definitions for the data elements.
Since the beginning of the financial market turmoil in August 2007, the Federal Reserve's balance sheet has grown from $869 billion in assets on Aug. 8, 2007, to more than $2 trillion.
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