When the GAO report came out on the Quantitative Easing by the Federal Reserve, it uncovered a secret $16 trillion feeding tube from the Fed structured as revolving, low-cost loans to any bank (foreign or domestic) teetering on the edge. Amazingly, the audit showed the Fed started the loans in December 2007 – long before the public knew there was a dangerous financial crisis – and it lasted until at least July 2010.
In addition to the publicly known support to Bear Stearns from the New York Fed, the GAO audit revealed that the Federal Reserve provided another $853 billion in secret loans to Bear Stearns; $851 billion from its Primary Dealer Credit Facility and $2 billion from its Term Securities Lending Facility. It wasn’t until May 31, 2008, when JPMorgan Chase closed its deal with Bear Stearns. However, the GAO reported that Bear Stearns “was consistently the largest PDCF borrower until June 2008.” The Fed shows that Bear Stearns continued to receive funds until June 23, 2008.
Then by April 2010, that is when Greece had to ask the IMF for a bailout. What is amazing is how no banker was ever charged for the toxic financial waste they created while trading against their own clients.