Fed Lending Disclosures Fuel Criticism
The U.S. Federal Reserve extended favorable lending terms to many non-financial firms and foreign banks, according to details of its emergency lending programs released to Congress (WashPost). The admissions could stoke more frustration among critics of its bailout of Wall Street during the financial crisis and its recent decision to engage in $600 billion of quantitative easing. Recipients of the $3.3 trillion in emergency aid (Bloomberg) included General Electric, McDonald's, Swiss bank UBS, and investors like computer executive Michael Dell. Upon release of the 21,000 transactions under question, Sen. Bernard Sanders (I-VT) -- who wrote the law requiring the disclosures -- said the Fed's aid to foreign banks and corporations should have included more protections for taxpayers and mortgage borrowers (NYT). In a statement, the Fed said it incurred no losses on completed programs and expected no losses on those remaining. Britain's Barclays and RBS, some of the biggest borrowers from the Fed's Term Auction Facility (TAF), said they repaid all the money borrowed (FT).
In BusinessWeek, Rich Miller examines the struggle by Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner to defend the Fed's latest moves and preserve its independence.
The result of Bernanke's QE2 could be monetization of the nation's growing debt (by printing new money to finance deficit spending), writes Scott Powell in the New York Post.
In the National Review, David Beckworth says despite conservative criticism of QE2, the program could promote conservative principles.
This Backgrounder examines the role of the Federal Reserve