Fed emergency loans saved many people during the financial crisis


Dexia was one of the most frequent and prolific borrowers.

In October 2008, the company’s US subsidiary regularly visited the discount window to renew what amounted to a line of credit that eventually reached tens of billions. The company continued to borrow from the Fed until November 2009, taking over 100 short-term loans.

Dexia, which specializes in lending to municipalities, made the almost fatal mistake of buying an American company that insured bonds, including subprime mortgage bonds. The French, Belgian and Luxembourg governments invested around $9.2 billion to stabilize the company in 2008.

Ulrike Pommee, a spokeswoman for the company, called the information released Thursday “retrospective” and said the bank had been open about its need for help.

“Dexia was one of the most centrally dependent banks,” Ms Pommee said in an email. “The Fed played its role as central banker, providing liquidity to banks that needed it.”

The Arab Banking Corporation, partly owned by the Central Bank of Libya, was another frequent visitor, taking more than two dozen short-term loans of hundreds of millions of dollars each.

“It is incomprehensible to me that while creditworthy small businesses in Vermont and across the country could not receive affordable loans, the Federal Reserve was extending tens of billions of dollars in credit,” Senator Bernie Sanders wrote, Vermont Independent, in a letter sent Thursday to Fed Chairman Ben S. Bernanke and other government officials.

The data also provided new details about the struggles of the biggest banks.

Goldman Sachs, which said it only borrowed at the counter as a test, took out five loans of $1 million to $50 million between September 2008 and January 2010.


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