Federal Reserve loaned Libya-backed bank billions during subprime crisis

April 5, 2011 by · Leave a Comment
Filed under: Global News 

Hope we all enjoy these dirty little secrets getting out about what happened behind the scenes during the housing sub-prime crisis.   We all knew deep down inside that we were giving financial support to almost any institution that asked for it.   Back in the days, news like this would sink a banks reputation and taking a government loan would be an action they would run from like the bubonic plague.  They knew their reputation and confidence the market had afforded them was basically priceless.

Those days are long gone, maybe I am just a romantic like that.   Now we have set a precedent that ignores those type of self-regulating customs that would keep most bankers prudent even if it wasn’t codified in law.  Oil is heading back up again, once we cross the $120 per barrel mark, we will see a major ripple effect through-out the economy.  This will trigger the double-dip recession in my opinion.   The question will be if we are going to let the bad debt and companies go out of the system.  Watch the market close, it could turn on a dime.

AFP – The Federal Reserve lent a Libyan state-backed bank billions of dollars during the financial crisis, documents made public on Thursday have revealed.  The Arab Bank Corporation, which is today 59.3 percent owned by the Libyan government, borrowed in slices as big as $1.175 billion from the US central bank.

At the time the bank was not majority owned by the Tripoli government; other shareholders included the Kuwait Investment Authority and the Abu Dhabi Investment Authority.  The Bahrain-headquartered firm appears frequently in the Fed’s records of its emergency short-term lending facilities between March 2009 and March 2010.

Since then the United States has slapped sanctions on the Libyan regime and sought to isolate Moamer Kadhafi and his top lieutenants. The Arab Bank Corporation, which is chaired by the head of Libya’s state investment fund, however is not subject to Libyan sanctions.

But some US lawmakers were incredulous about the Fed lending to the Libyan-government backed banks.Democrat-allied Senator Bernie Sanders said the Fed made “46 emergency, low-interest loans” to the bank, providing a total of $26 billion in credit, though not at one time.

Source

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!