Photo: The Daily Bail
Yesterday a two year fight ended when the Fed released the details of which banks used the emergency lending window at the height of the financial crisis.And there was a surprising revelation —
“The biggest borrowers from the 97-year-old discount window as the program reached its crisis-era peak were foreign banks, accounting for at least 70 per cent of the $110.7 billion borrowed during the week in October 2008 when use of the program surged to a record,” Bloomberg reported.
It’s important to remember that the discount window wasn’t the only facility through which banks could get emergency loans as the economy collapsed. And from those other facilities — the PCDF, AMLF, TAF, TSLF — the U.S banks borrowed heavily.
But the firms that took advantage of the Fed’s 97-year-old emergency lifeline, were oversees banks.
- Dexia, based in Brussels and Paris, borrowed about $33.5 billion through its New York branch.
- Dublin-based Depfa Bank withdrew $24.5 billion.
- Societe Generale borrowed at least $5 billion.
- Norinchukin Bank, a Japanese lender, withdrew at least $6 billion.
- Bank of China was the second-largest borrower from the discount window “during a nine-day period in August 2007 as subprime-mortgage defaults first roiled broader markets,” Bloomberg said.
- Two Deutsche Bank divisions borrowed $1 billion each.
- Arab Banking Corp (which at the time was 29% owned by Libya’s central bank) borrowed $1.1 billion through its New York branch.
In fact the only American bank to make the top five borrowers, was Wachovia — it borrowed $29 billion from the discount window in the week after it almost imploded.