$80 Billion In Secretive Fed Loans Disclosed

An article from Bloomberg today reveals that the Federal Reserve instituted a secretive loan program from March through December 2008, which provided cheap funding to troubled banks. The largest borrowers were Credit Suisse CS, Goldman Sachs GS and Royal Bank of Scotland RBS, each of which borrowed at least $30 billion. The initiative was called single-tranche open-market operations, or ST OMO, and made 28-day loans to financial institutions using auctions. The banks paid interest rates as low as 0.01%, when the Fed's main lending facility was charging 0.05%. “This was a pure subsidy,” said Robert A. Eisenbeis, former head of research at the Federal Reserve Bank of Atlanta and now chief monetary economist at Sarasota, Florida-based Cumberland Advisors Inc. “The Fed hasn't been forthcoming with disclosures overall. Why should this be any different?” Find the entire story, written by Bob Ivry, here.