Banks borrowed $1.2 trillion during financial crisis, news report reveals

23 August 2011

The banks and financial institutions borrowed $1.2 trillion in loans from the Federal Reserve (Fed) during the global credit crisis, a news report has revealed.

According to Bloomberg, which uncovered the figures through requests made via the Freedom of Information Act, the authorities provided the money in addition to the $700 billion proffered through the Troubled Asset Relief Program (TARP).

Morgan Stanley was the biggest borrower with the bank receiving $107.3 billion in support - other institutions to receive large sums included Citigroup with $99.5 billion and Bank of America with $91.4 billion.

Previously, the Fed argued that the figure should not be released as it could be harmful to the prices of stocks and could stigmatize banks.

Robert Litan, a former Justice Department official, told the news provider: “These are all whopping numbers. You’re talking about the aristocracy of American finance going down the tubes without the federal money.”

Banks are still repaying funds borrowed as part of TARP - American International Group (AIG) recently repaid the US Treasury £2.15 billion after selling a Taiwan life insurance unit.

By Jim Ottewill

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