Foreign Banks Benefited from U.S. Bailout

New York (TheStreet) -- Several large foreign banks benefited heavily from the U.S. government's $3.3 trillion bailout of the financial system, according to documents released Wednesday.

A initial review of information released by the Federal Reserve shows that foreign banks such as Royal Bank of Scotland(RBS_), Barclay's PLC(BCS_), Dresdner and Society Generale (GLE) borrowed heavily from the Fed's Term Auction Facility (TAF) during the initial days of the financial crisis.

The TAF program was created in 2007 as markets were seized and gave banks access to short term funding. The program was open to all banks with access to the Fed's primary discount window and allowed foreign banks access through local reserve banks where branches were located.

The last TAF auction was held in March of this year.

The Fed posted the data on its website to comply with a court order following a lawsuit filed by Bloomberg

While much of the information will not come a surprise, details could post a political risk to the U.S. government's support of the bank system.

"My guess is there's probably no financial risk to the system arising from this disclosure but there likely will be more political risk," says Robert Goldberg, Adelphi University adjunct professor in finance and former Wall Street investment banker. "So, once again, a one-sided bet, where banks take risk, things go bad, they get bailed out. Things go good and they reap the rewards. It's a sweet deal."

« BOMBSHELL VIDEO - Greenspan Admits To Rampant Fraud & Illegal Activity In U.S. Banking System While On Jekyll Island Stage »

http://tinyurl.com/22o6j8g

Stop! Watch this. From the FED celebration at Jekyll Island over the weekend. Bernanke looks uncomfortable as Greenspan admits the truth. Runs 50 seconds.

Greenspan, Bernanke and former NY Fed president, Gerald Corrigan - Nov. 6

Let's make this one go viral:

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There Is A WAR Being Waged Against The Working Families Of America! Sen Bernie Sanders

Click this link ..... http://tinyurl.com/235gekn

Joan Veon When Central Banks Rule the World Part 1

Click this link ...... http://www.youtube.com/watch?v=vEJdeWvGIZU

US unemployment to persist: Fed chief

US Federal Reserve Chairman Ben Bernanke

The US Federal Reserve chairman warns that Americans may not get rid of high unemployment rate soon, as the country grapples with the worst recession since the Great Depression.

Speaking during a meeting attended by several business executives at the Ohio State University on Tuesday, US Federal Reserve Chairman Ben Bernanke voiced his deep concerns over the slow pace of the economic recovery in the United States, saying that "We're not growing fast enough to materially reduce the unemployment rate," AP reported.

Bernanke said the economy needs growth of 2 percent to 2.5 percent in order to inject life into the dried-up job markets.

As the US economy tumbles in the face of a big recession and growing jobless rates, he acknowledged that job creation is the biggest issue plaguing the US economic growth.

Earlier this month, Bernanke had given a robust backing of the Fed's $600 billion stimulus plan, which was thrashed out in an effort to boost the ailing economy and slash the unemployment rate.

According to latest estimates by the Fed, the unemployment could remain steadily at around 9 percent through 2011.

"There are obviously very severe economic and social consequences from this level of unemployment," said Bernanke, insisting that "getting new jobs, getting unemployment down is of an incredible importance."

The unemployment rate remained stuck at 9.6 percent in October for the third consecutive month.

The remarks come amid a standoff in the Senate over a long-term extension of federal unemployment benefits.
In October, the US Labor Department announced a 20,000 increase in initial claims for unemployment benefits.

According to latest figures, almost 15 million Americans currently collect unemployment benefits.

HA/MGH

US Ready to Back Bigger EU Stability Fund: Official

The United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund, a U.S. official told Reuters on Wednesday.

"There are a lot of people talking about that. I think the European Commission has talked about that," said the U.S. official, commenting on enlarging the 750 billion euro ($980 billion) EU/IMF European stability fund. "It is up to the Europeans. We will certainly support using the IMF in these circumstances."

"There are obviously some severe market problems," said the official, speaking on condition of anonymity. "In May, it was Greece. This is Ireland and Portugal. If there is contagion that's a huge problem for the global economy."

The remarks foreshadow a visit to Europe this week by a U.S. Treasury envoy who is expected to visit Berlin, Madrid and Paris to hold talks on the ramifications of the debt crisis.

(Another news report, however, raised questions about the true extent of the US commitment. Read more here).

The developments have echoes of the pressure applied by Washington on European capitals last May to create the near $1 trillion EFSF safety net that was last week used to rescue Ireland after its banking crisis spiraled out of control.

The IMF, whose biggest single shareholder is the United States, has committed 250 billion euros to the EFSF.

While reluctant to dictate to Europe how it should address the unfolding debt crisis, the U.S. government is growing concerned about the global fallout of Europe's predicament.

U.S. Treasurys' prices fell and the euro strengthened against the dollar on Wednesday after the news that the United States would be prepared to support an enlarged EFSF.

Germany, whose leaders have expressed frustration at the market backlash against their plans to solve the euro zone's debt problems, does not want to make the stability fund larger.

Meet The 35 Foreign Banks That Got Bailed Out By The Fed (And This Is Just The CPFF Banks)

One may be forgiven to believe that via its FX liquidity swap lines the Fed only bailed out foreign Central Banks, which in turn took the money and funded their own banks. It turns out that is only half the story: we now know the Fed also acted in a secondary bail out capacity, providing over $350 billion in short term funding exclusively to 35 foreign banks, of which the biggest beneficiaries were UBS, Dexia and BNP. Since the funding provided was in the form of ultra-short maturity commercial paper it was essentially equivalent to cash funding. In other words, between October 27, 2008 and August 6, 2009, the Fed spent $350 billion in taxpayer funds to save 35 foreign banks. And here people are wondering if the Fed will ever allow stocks to drop: it is now more than obvious that with all banks leveraging the equity exposure to the point where a market decline would likely start a Lehman-type domino, there is no way that the Brian Sack-led team of traders will allow stocks to drop ever... Until such time nature reasserts itself, the market collapses without GETCO or the PPT being able to catch it, and the Fed is finally wiped out in one way or another.

The 35 companies in question:

UBS
Dexia SA
BNP Paribas
Barclays PLC
Royal Bank of Scotland Group
Commerzbank AG
Danske Bank A/S
ING Groep NV
WestLB
Handelsbanken
Deutsche Post AG
Erste Group Bank AG
NordLB
Free State of Bavaria
KBC
HSH Nordbank AG
Unicredit
HSBC Holdings PLC
DZ Bank AG
Republic of Korea
Rabobank
Sumitomo Mitsui Banking Corporation
Banco Espirito Santo SA
Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Syngenta AG
Mitsui & Co Ltd
Bank of Montreal
Caixa Geral de Depósitos
Mitsubishi UFJ Financial Group
Shinhan Financial Group Co Ltd
Mitsubishi Corp
Aegon NV
Royal Bank of Canada
Sumitomo Corp