Federal Reserve 'loaned out $5bn to Libya-owned bank'

1 April 2011

A Libya-owned bank received 73 loans from the US Federal Reserve in the 18 months following the collapse of Lehman Brothers Holdings, it has been reported.

Arab Banking Corporation was 29 per cent-controlled by the Libyan state at the time and its aggregated borrowings during the period reached $35 billion.

The biggest single loan amount outstanding was $1.2 billion in July 2009, while repeated loans totalled more than $2 billion in October 2008.

In a letter to US officials, senator Bernard Vermont said that he found it incomprehensible that small businesses across the US could not receive loans, yet "the Federal Reserve was providing tens of billions of dollars in credit to a bank that is substantially owned by the Central Bank of Libya".

Earlier in the week, Bloomberg News reported that the Federal Reserve extended financial lifelines to hundreds of banks - raising the question of whether some institutes were kept afloat when they should have gone bust.

By Gary Cooper

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development