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No One Telling Who Took $586B in Fed Swaps

Posted By admin On December 12, 2011 @ 8:54 am In Money Watch,Tile | Comments Disabled

Scott Lanman and Bradley Keoun
Bloomberg [1]
December 12, 2011

For all the transparency forced on the Federal Reserve by Congress and the courts, one of the central bank’s emergency-lending programs remains so secretive that names of borrowers may be hidden from the Fed itself.

As part of a currency-swap plan active from 2007 to 2010 and revived to fight the European debt crisis, the Fed lends dollars to other central banks, which auction them to local commercial banks. Lending peaked at $586 billion in December 2008. While the transactions with other central banks are all disclosed, the Fed doesn’t track where the dollars ultimately end up, and European officials don’t share borrowers’ identities outside the continent.

The lack of openness may leave the U.S. government and public in the dark on the beneficiaries and potential risks from one of the Fed’s largest crisis-loan programs. The European Central Bank’s three-month dollar lending through the swap lines surged last week to $50.7 billion from $400 million after the Nov. 30 announcement that the Fed, in concert with the ECB and four other central banks, lowered the interest rate by a half percentage point.

“Increased transparency is warranted here,” given the size of the Fed’s aid and current pressures on European banks, said Representative Randy Neugebauer, a Texas Republican who heads the House Financial Services Subcommittee on Oversight and Investigations.

Full article here [1]


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URLs in this post:

[1] Bloomberg: http://www.bloomberg.com/news/2011-12-11/no-one-says-who-took-586-billion-in-fed-swaps-done-in-anonymity.html

[2] Stress Tests Prove that Credit Default Swaps Still Pose a Huge Risk to the Economy: http://www.prisonplanet.com/stress-tests-prove-that-credit-default-swaps-still-pose-a-huge-risk-to-the-economy.html

[3] Euro Region’s Central Banks Seen Providing Up to $270 Billion Through IMF: http://www.prisonplanet.com/euro-region%e2%80%99s-central-banks-seen-providing-up-to-270-billion-through-imf.html

[4] TIME Asks Can the U.S. Federal Reserve Help Save Europe’s Banks?: http://www.prisonplanet.com/time-asks-can-the-u-s-federal-reserve-help-save-europes-banks.html

[5] Federal Reserve Bleeds The Dollar To Keep Europe On Life Support For Another Week: http://www.prisonplanet.com/federal-reserve-bleeds-the-dollar-to-keep-europe-on-life-support-for-another-week.html

[6] European Central Bank Makes Massive Loans to 523 Banks: http://www.prisonplanet.com/european-central-bank-makes-massive-loans-to-523-banks.html

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