For the first time in its 98-year history, the Federal Reserve on Thursday identified banks that borrowed from its oldest lending program.
The Fed was compelled to name the banks that drew emergency loans during the financial crisis after the Supreme Court rejected a bid by major banks to keep that information secret. It's the latest sign of how the Fed is becoming more transparent -- either by choice or by force.
The central bank lent up to $110 billion through its emergency "discount window" at the height of the crisis. After Lehman Brothers collapsed in September 2008, banks turned to the Fed as a lender of last resort because their credit had frozen up. The Fed argued then that naming those banks could have stirred a panic, leading to a run on those banks and defeating the program's purpose.
The documents released Thursday showed that a range of large and small institutions borrowed from the program from August 2007 through March 2010.
Most of the lending took place in the two-month stretch between September and October 2008. The specific program that the banks drew from has been redacted from the documents, but the data points to most of the loans being through the "discount window." In many cases, those loans were paid back the following day.
Some of the biggest loans were drawn by the nation's largest banks. For example, U.S. Bank took out an overnight loan of $3.35 billion on Sept. 10, Wachovia borrowed $29 billion on Oct. 6, and Morgan Stanley drew more than $3 billion on Oct. 9.
Comment: The Night They Drove Old Dixie Down (one of my favorite The Band numbers). That day was the date Wachovia was forced into sale by the FDIC ...