According to a Freedom of Information Act request, the Federal Reserve made as much as $1 trillion in secret loans to America's largest banks during the height of the 2008 housing crisis.
The loans were supposed to remain a secret. But the Fed was forced to bare all after a freedom of information act request. According to Bloomberg Financial News Service, the Fed lent the most to Morgan Stanley, which got as much as $107 billion; Citigroup got about $99 billion. The Fed changed the rules to make things easier for the banks. It accepted risky collateral to back the loans like junk bonds and stocks.
The Fed insists it didn't lose any money on the emergency, secret loans. That doesn't wash with Len Blum, a managing partner at Westwood Capital.
Mr. Blum told newsmen, “That argument doesn't ring true to me. It's like someone saying they went to Las Vegas but it was safe because they won."
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