CHARLOTTE, N.C. - $7.7 trillion, not $700 billion. That's how much Bloomberg News says America's big banks really got from the fed to keep afloat between 2007 and 2009.
The Federal Reserve wanted to keep the details private, saying it would create a stigma for firms that used the central bank as a lender of last resort.
Others argue that the so-called secret funding helped maintain a "broken status quo and enabled the biggest banks to grow even bigger." Bloomberg reports those banks earned an estimated $13 billion in income by taking advantage of the Fed's below market loan rates.
Charlotte's part of this. Bloomberg reports the Fed routed $50 billion in secret loans to Wachovia through two emergency financing programs to prevent collapse before Wells Fargo completed its purchase of the bank in 2008. A Wells Fargo spokesperson tells FOX Charlotte in part, "These programs proved to be very successful at providing financial markets the additional liquidity, and confidence they needed at a time of unprecedented uncertainty."
Bloomberg also reports that Bank of America got $25 billion in emergency Fed loans. Merrill Lynch, which BofA had just purchased, got $60 billion in so-called secret loans, "helping both firms keep the deal on track." A BofA spokesperson tells FOX Charlotte, "we have no comment on the report."
Critics say it all points to the need to regulate banks and limit their size. Supporters say breaking them up would cost jobs and cause long term damage to the US economy.
The director of the Fed's Division of Monetary Affairs, William English, says, "Supporting financial market stability in times of extreme market stress is a core function of central banks. Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses."
The Bloomberg report also says that employees at the country's six biggest banks, including BofA and Wells Fargo, made twice as much as the average US worker in 2010 - despite those bailouts.
Fed officials tell Bloomberg that all of the loans were repaid and there have been no losses.
Here's a link to the entire Bloomberg report: http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html