Federal Reserve data shows UBS AG and Barclays Plc, is among the main users of $ 3.3 billion emergency programs is to revive the debate on whether U.S. regulators have a responsibility to help banks of other nations.
UBS is the largest borrower under the Commercial Paper Funding Facility, with 74.5 billion in general, more than twice as much as Citigroup Inc., the largest recipient of U.S. Bank, according to data released yesterday. Barclays Plc was the largest single amount under another program that makes loans to one day, when it got 47.9 billion U.S. dollars on September 18, 2008.
"We're talking huge sums of money going to bail out major foreign banks," said Senator Bernard Sanders, independent of Vermont who wrote the provision in the Dodd-Frank bill requiring disclosure of the Fed "has Federal Reserve to become the world's central bank? "I think it's an issue that needs examination."
The first detailed account of U.S. efforts to save European banks can be added to control the Central Bank, and at its most intense in three decades. The Fed, which published data on 21.000 transactions, said in a statement that its 11 emergency programs helped stabilize markets and support economic recovery. The Fed said that there has been no credit losses in the bailout programs that have been closed.
The growth of the U.S. stock market mortgage-backed securities and the dollar's status as world reserve currency attracted foreign banks like UBS, based in Zurich to buy assets in the country by 2008. Holdings paid with U.S. dollars, and when funding is stalled, the Fed refused to take the risk that European companies are downloaded and get even more active markets for housing-related investments.
"Much worse"
"Things have been worse had they not been given to foreigners," said Perry Mehrling, Senior Fellow of the Morin Center for Banking and Financial Law at Boston University and author of "The New Street Lombard: How the Federal Reserve became the provider of last resort. "" We are finally coming to understand the Fed's role in the world. "
spreadsheets of the Fed showed that the central bank became global lender of last resort in dollars flowed into European banks and Bank of America Corp. and Wells Fargo & Co., among the major debtors Term Fund Auction at $ 45 million each.
Goldman Sachs Group Inc., which reported record profits last year, borrowed more than $ 24 million dollars from another program. Milwaukee-based Harley-Davidson Inc. and Fairfield, Connecticut, General Electric Co. sold commercial paper, a form of short-term debt, the Federal Reserve under a program that paid as much as $ 348 200 000 000 in its peak.
Sanders, the Vermont senator said yesterday it plans to investigate whether the bank benefited from the Federal Reserve loans and investment of funds in Treasury bonds, which benefit from the difference in interest rates.
Rescue Protection Act '
U.S. Representative Mike Pence, Republican of Indiana, said he planned to introduce a "Law on Protection of European rescue" to restrict the flow of loans from the International Monetary Fund European countries. He said he was responding to reports that U.S. officials could promote a European fund to deal with debt crisis this year, which has spread from Greece to Ireland.
Edwin Truman, a former Fed official who is a senior fellow at the Peterson Institute for International Economics in Washington, said any push to limit the role of the Fed to U.S. banks would create a "massive exercise in financial protectionism."
"It would lead to reprisals, so U.S. banks in London or Tokyo will expect the same kind of treatment," said Truman. William Poole, economic adviser at Merk Investments LLC and former Federal Reserve Bank of St. Louis president, said he was surprised by the magnitude of loans from banks outside the United States.
Commercial Paper
"I was under the impression that each country had the responsibility for supervision of banks based on its borders," Poole said in an interview.
The 74.5 billion U.S. dollars received by UBS through the CPFF, who bought the short-term debt, represents the total debt by UBS over the life of the program. The total outstanding at any point in time never exceeded half that amount, said Karina Byrne, a UBS spokesman.
Byrne said the bank touching the bottom of the Fed "should be considered in the context of our general desire to maintain flexibility and diversification of our funding sources."
The loan to a unit of Barclays Global Wine primary dealer credit, designed to ensure that U.S. securities firms and foreign affiliates of U.S. companies had cash to satisfy customers' demands for funding.
Barclays made the loan a week in September 2008 it purchased the U.S. operations Lehman Brothers Holdings Inc., Mark Lane, a spokesman for Barclays, declined comment.
"A big operation"
Paris-based Natixis, a loan of $ 27 billion commercial paper program. "We have a large operation in the U.S.," said Victoria Eideliman, a bank spokesman. "It was, for us, natural to participate in this program like all the banks. When we participate, the liquidity situation was very tense."
The bailout of $ 182,300,000,000 of American International Group Inc. spared European banks that deal with the insurance company based in New York from having to raise up to $ 16 billion in capital, according to a June report of the Monitoring Group Congress, which reviews the costs of rescue.
Fed chairman, Ben S. Bernanke addressed questions in a 2009 Congressional hearing about why the U.S. banks benefited from the rescue of AIG.
"Obligation"
"I note that Europeans have also kept a number of major financial institutions, and the question of whether the institutions owed money to American companies has not come," said Bernanke. "So I think there is a feeling that we all have an obligation to address the problems of the companies in our own jurisdiction."
Three of the seven largest borrowers under the CPFF program were private companies. Castle Hudson New York received 53.3 billion U.S. dollars in total, BSN shares was 42.8 billion U.S. dollars, and Liberty Hampshire Co., a unit of Guggenheim Partners LLC, drew 41.4 billion U.S. dollars, data Fed show.
Hudson's website says it develops "products as debt." A person who answered the phone said no one was available for comment. A Guggenheim spokesman did not return phone calls.
BSN Capital Partners Ltd., has partnered with BSN Shares in accordance with a note of 2006 Standard & Poor's, was founded by John Burgess, a former chief executive of Deutsche Bank AG. Burgess declined comment.
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