Dying Banks Kept Alive Among Secrets Fed Data Will Reveal

[dipsydoodle]

Source: Bloomberg News

U.S. regulators closed Chicago- based Park National Bank in October 2009 when it owed $345 million to one of the lowest-cost lenders in town: the Federal Reserve’s discount window. Park National had been a constant customer at the window for more than 18 months before it failed, records show.

That glimpse into the loan program, gleaned through the Freedom of Information Act, will be expanded this week with an unprecedented view of the secret lifelines the Fed extended to hundreds of banks. Officials plan to release documents that amount to more than 6,000 pages, according to court records. Bloomberg LP, the parent company of Bloomberg News, and News Corp.’s Fox News Network LLC requested the records under FOIA, then sued after the central bank refused to release them.

Without identifying them as of yet, Fed officials say all the discount window loans made during the worst financial crisis since the 1930s have been repaid with interest. Cases such as Park National’s show how the lending amounted to a secret public subsidy, with few questions asked.

“Solvency is the big issue,” said Arthur Wilmarth, a professor at George Washington University Law School in Washington. “Was the Fed keeping banks alive when they should have died?”

Read more: http://www.bloomberg.com/news/2011-03-29/dying-banks-kept-alive-show-secrets-fed-s-data-will-reveal-for-first-time.html

[cutlassmama]

1. well, this should end well...LOL. Sounds like one big clusterf&^&*

[Demeter]

2. The Worst-Kept Secrets in Town

What makes them think it's any different today?

[indimuse]

3. KNR! n/t

[fasttense]

4. That's one dollar for every man, woman and child in America.

Don't you just love supporting zombie banks with your tax dollars?

[robcon]

5. Probably cause a run on those problem banks.

Could be the end of some of them.

I think as long as FDIC insurance is in effect for those problem banks, the information should be embargoed to avoid a run on those insured banks - saving significant money for the FDIC.

Info should be released years later, IMO.

[Javaman]

6. And just what, exactly, will be done?

I have your answer: nothing.

There will be all sorts of investigation on our dime. People brought before this judge or that judge to "testify". Various news pundits making all sorts of money over this. A few rant and raves by the fox news half wits that will further distract the masses.

And slowly it will begin to vanish as the news cycle turns it's attention toward the latest "controversy" or disaster or a desperate housewife infected hangnail.

You know why a ring is put through a bulls nose, right?

[robcon]

7. Are you arguing that the FDIC shouldn't have tried to save the bank?

They should have given up - even if they thought the bank was salvageable? Just spend the $345 million?

In retrospect, not everything the FDIC does turns out right, but the attempt to save some banks, and save FDIC money, is a very worthwhile endeavor, IMO.

[Javaman]

8. No.

I'm just saying it's just one more thing in the long charade things that gets passed off as "accountability", in an otherwise unaccountable system.

Yes, the FDIC does good work, but the reality is: they are only doing what they were set up to do.

While the rest of the system continues and remains a scam.