Federal Reserve Releases Massive Amount of Bailout Data

Federal Reserve Releases Massive Amount of Bailout DataThe Federal Reserve on Wednesday released detailed information about the steps it undertook to stabilize financial markets during the financial crisis as they faced their worst downturn since the Great Depression.

According to a statement on the central bank's website, the disclosures cover more than 21,000 individual transactions done to "restore the flow of credit to American families and businesses, and support economic recovery and job creation in the aftermath of the crisis."

The Fed, which is facing increasing criticism from Republicans and the Tea Party faction, defended these actions, arguing that it followed sound risk-management practices, incurred no losses on the programs that have been wound down and doesn't expect to lose money on those that are still under way.

Among the highlights:
  • The Fed acquired $1.25 trillion in mortgage-backed securities between January 2009 and March 2010.
  • In 2008, the Fed authorized a $12.9 billion bridge loan to Bear Sterns that was repaid in full. It wasn't enough. JPMorgan Chase (JPM) emerged as the only viable bidder to buy the failing firm. To facilitate the transaction, the Federal Reserve Bank of New York created a limited liability company called Maiden Lane and lent that entity $29 billion. JPMorgan lent $1 billion to Maiden Lane.
  • Citigroup (C) did not receive any funding under an agreement to provide "certain loss protections and liquidity supports. . .with respect to a designated pool of $301 billion of assets."
Fed officials made the data public -- the largest such release in the history of the central bank -- to comply with the Dodd-Frank financial regulation law passed in July. Sen. Bernie Sanders (I-Vt.) was instrumental in getting the document-release provision written into law. The Government Accountability Office also is conducting an audit of the Fed's actions during the financial crisis, which Sanders also pushed for over the objections of Fed Chairman Ben Bernanke.

In a statement in May on the Senate floor quoted by The Wall Street Journal, Sanders explained: "This $2 trillion. . .does not belong to the Fed. It belongs to the American people, and the American people have a right to know where trillions of dollars of their taxpayer dollars are going."


Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »