* Window lending peaked at $111 billion on Oct. 29, 2008
* European banks Dexia, Depfa took almost half that total
* 25,000-plus pages provide window on bank crisis needs
(Recasts, adds details on biggest borrowers)
By Mark Felsenthal and Emily Kaiser
WASHINGTON, March 31 A European bank that was
later exposed to the Madoff scandal and an Arab company now
majority-owned by the Libyan central bank were among an odd
assortment of firms that dug deep into the U.S. Federal
Reserve's coffers as the financial crisis exploded in 2008.
Two second-tier European financial players -- Dexia and
Depfa -- accounted for nearly half of the $111 billion borrowed
from the Fed on Oct. 29, 2008, the day that lending through its
emergency discount window peaked.
Nine of the 12 largest borrowers on that day were
foreign-owned firms, according to Fed lending data released on
Thursday to comply with a court order. Wachovia, now part of
Wells Fargo, was the biggest U.S. recipient with $15 billion.
Many of the biggest U.S. banks are conspicuously absent
from the discount window borrowing list. They opted instead to
use other emergency lending programs that the Fed created on
the fly in the middle of the crisis.
Topping the list of peak day borrowing were Belgian-French
Dexia (DEXI.BR), which borrowed $26.5 billion, and Dublin-based
Depfa, a subsidiary of German property lender Hypo Real Estate
Holding, with $24.6 billion.
For a factbox on top borrowers on Oct. 29, 2008, see:
For financial crisis timeline see [ID:nN30168980]
For a graphic on discount window lending see:
Dexia disclosed in December 2008 that it could face an
after-tax loss of 85 million euros if the value of assets
managed by Ponzi schemer Bernard Madoff proved to be worthless.
Dexia said it had no direct investments in Madoff funds, but
some private banking clients did and Dexia also had indirect
exposure to Madoff-linked funds through lending operations.
Arab Banking Corp, No. 11 on the list of peak-day borrowers
with a $1.1 billion loan, is now nearly 60 percent owned by the
Central Bank of Libya.
The collapse of Lehman Brothers in September 2008 sent the
global economy into a tailspin and caused the financial system
to seize up. The Fed's documents -- more than 25,000 pages in
all -- illustrate how widely the damage spread, forcing banks
around the world to seek emergency help.
In the days and weeks following Lehman's bankruptcy, the
Fed also made multi-billion-dollar loans to other foreign banks
through its discount window, including Austria's Erste Group
(ERST.VI), Royal Bank of Scotland (RBS.L), Germany's
Commerzbank (CBKG.DE) and France's Societe Generale (SOGN.PA).
The discount window is the Fed's regular facility for
providing emergency cash to banks in difficulty. In normal
times, it is rarely used, in part because banks fear the stigma
of having sought emergency help.
The Fed had resisted releasing the names of banks that
tapped the discount window on the grounds that doing so might
discourage firms from seeking help in the future. The central
bank released the names only after having run out of legal
appeals to block publication.
The documents detail lending from the Fed's discount window
for period of Aug. 8, 2007, to March 1, 2010.
The Fed, its hand forced by a new law that rewrote U.S.
financial rules, disclosed details of other emergency lending.
Some of those programs doled out far more than the
traditional discount window. The Term Auction Facility, for
example, lent $493 billion on March 11, 2009 -- more than four
times the amount of the discount window's peak lending day.
Citigroup (C.N), Bank of America (BAC.N) and other industry
giants that are eligible for discount window loans borrowed
heavily from those other programs in the weeks after Lehman
failed. So did foreign banks.
"As much as the government tried to change the perception
of it, there was always a stigma of being at the Fed window,
and that never really went away during the crisis," said
Jefferson Harralson, a bank analyst with Keefe, Bruyette &
Analysts said the other lending programs also accepted
different types of collateral and offered longer-term loans,
which may have made them more attractive to big banks.
A handful of small banks show up on the discount window
borrowing list taking loans of $1,000. Chip MacDonald, a
banking attorney with Jones Day in Atlanta, said those may have
been merely tests to see whether processes for accessing the
discount window were up to speed.
COMING INTO THE LIGHT
Bloomberg LP, the parent of Bloomberg News, and News Corp's
Fox News Network had sought the bailout details under the
federal Freedom of Information law, which requires government
agencies to make certain documents public.
The lending facility is an important tool the Fed has at
its disposal to ensure banks remain liquid in times of stress.
"It should be emphasized that confidentiality is not meant
to protect the identities of individual banks per se, but
rather to make the discount window more effective in dealing
with market disturbances," New York Federal Reserve Bank
economists Joao Santos and Stavros Peristiani wrote on the
regional central bank's blog on March 30.
(Additional reporting by Rachelle Younglai in Washington,
Kristina Cooke in New York and Joe Rauch in Charlotte, N.C.;
Editing by Neil Stempleman and Leslie Adler)