Banks tapped Fed for billions

Steve Dinneen
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BANK of America went cap in hand to the Fed’s discount window twice more than perviously revealed, according to a slew of documents released by the Fed yesterday.

It borrowed a total of $1bn (£624m) over two days in August 2007, in addition to $500m previously disclosed.

The documents, which were released after a news wire obtained a court order, also show that two second-tier European financial players – Dexia and Depfa – accounted for nearly half of the $111bn borrowed from the Fed on 29 October, 2008.

Nine of the 12 largest borrowers on that day, when lending through its emergency discount window peaked, were foreign-owned firms.

Belgian-French Dexia borrowed $26.5bn, and Dublin-based Depfa, a subsidiary of German property lender Hypo Real Estate Holding, accepted $24.6bn.

In the days and weeks surrounding Lehman’s bankruptcy, the Fed also made multi-billion-dollar loans to other foreign banks through its discount window, including Bank of Scotland, which took out $5bn overnight, Royal Bank of Scotland, Commerzbank, Societe Generale and Austria’s Erste Group. Arab Banking Corp, now owned by the Central Bank of Libya, borrowed $1.1bn.