US Federal Reserve 'extended secret lifelines to banks'

29 March 2011

The US Federal Reserve extended secret lifelines to hundreds of banks, it has been claimed.

Bloomberg News reports that details of the deals are to be released this week after Bloomberg LP and Fox News Network sued the central bank for refusing to reveal the records under a freedom of information act.

The news provider noted US regulators had previously closed Park National Bank when it owed $345 million to the Federal Reserve's discount window - adding this acts as a glimpse into the wider-reaching loan programme.

"Cases such as Park National's show how the lending amounted to a secret public subsidy, with few questions asked," the agency observed.

Professor Arthur Wilmarth, from the George Washington University, questioned whether the Federal Reserve was keeping banks alive that ought to really have died.

The details of such loans come as Bloomberg News reported that banks in Ireland are in need of additional funds of their own, with the agency predicting a further $39 billion is required.

By Asim Shah

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