America's broke but Federal Reserve loaned $95B to Eurobank

This is one of those WTF posts.
The United States is broke. Our national debt is $16 trillion and counting, now 102% of our GDP.
So why did the U.S. Federal Reserve extend a taxpayer-funded “loan” of a whopping $95 BILLION to the troubled European Central Bank? — despite the fact that on December 14, 2011, Fed Chairman Ben Bernanke told Republican Senators that he had neither the intention nor authority to use taxpayer dollars to bail out troubled European banks.
We know this thanks to Judicial Watch, the nonpartisan public interest group that investigates and fights government control.
On July 11, 2012, Judicial Watch announced that it has sued the Board of Governors for the Federal Reserve System and the Federal Open Market Committee (FOMC), a committee within the Federal Reserve, for records detailing the Fed’s $95 billion taxpayer-funded bailouts of European Banks in December 2011, by way of a “currency swap” program extended by the Fed on November 30, 2011. (Judicial Watch v. Board of Governors of the Federal Reserve System and Federal Open Market Committee (No. 1:12-cv-01114))
So what’s a “currency swap” program?
Under what is known as a “temporary U.S. dollar liquidity swap arrangement,” the Fed lends U.S. dollars to foreign central banks which then auction these dollars off to their local banks. The Fed’s stated intent for initiating the program was to ease lending for European Banks during the financial crisis. The Fed initiated the program in December 2007 and allowed it to expire in February 2010. In May 2010, the Fed rebooted the program and on November 30, 2011, extended it through February 1, 2013. This extension prompted a sharp increase from $400 million to $95 billion in loans in December 2011.
On January 3, 2012, Judicial Watch submitted Freedom of Information Act (FOIA) requests seeking communications between the Federal Reserve Board of Governors, the FOMC, the Federal Reserve Bank of New York and the European Central Bank related to the November 30, 2011, currency swap extension. Judicial Watch also seeks access to records describing the justification for extending the currency swap program, as well as individual details regarding each swap transaction.
Moreover, given that little information is available to the public regarding the identities of the recipients of currency swap funds, Judicial Watch also seeks, “any and all records identifying, describing, or setting forth the identity of any bank or financial institution and the collateral offered by the bank or financial institution,” between December 5, 2011, through December 31, 2011.
As reported by Bloomberg:

For all the transparency forced on the Federal Reserve by Congress and the courts, one of the central bank’s emergency-lending programs remains so secretive that names of borrowers may be hidden from the Fed itself. As part of a currency-swap plan active from 2007 to 2010 and revived to fight the European debt crisis, the Fed lends dollars to other central banks, which auction them to local commercial banks…While the transactions with other central banks are all disclosed, the Fed doesn’t track where the dollars ultimately end up, and European officials don’t share borrowers’ identities outside the continent.

The Federal Reserve Bank of New York reports that, as of March 31, the European Central Bank had $33 billion in outstanding swaps. The secrecy of these arrangements has been criticized by Gerald O’Driscoll, a former vice president of the Federal Reserve Bank of Dallas, as “bailing out European banks and, indirectly, spendthrift European governments. It is difficult to count the number of things wrong with this arrangement.”
The Federal Reserve Board of Governors and the FOMC both acknowledged receipt of Judicial Watch’s records request on January 3, 2012, and was required to respond by February 1, 2012. However, as of the date of Judicial Watch’s lawsuit, neither defendant has submitted a lawful response to Judicial Watch’s original FOIA request.
“Chairman Bernanke can dress it up in whatever language he chooses, but these ‘currency swaps’ are nothing more than massive bailouts of European banks,” said Judicial Watch President Tom Fitton. “That we have to sue to get basic information about this massive bailout speaks volumes about the dubious nature of this under the radar program.”

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8 years ago

Thank you Dr. Eowyn for this incredible post! Shocking! I suspect money laundering! Who knows who is really getting these monies! And they should not have to sue to get the documentation! Something is rotten in Denmark!

8 years ago

Lord James of Blackheath,has documentation of the money laundering and fraud that has taken place. It will blow your mind. Americans have been taken advantage of for years upon years, you most likely will not find all of the truth in the United States,as the media is owned. Search in the UK. Past Presidents,past congresses the scope of involvement is huge.

8 years ago

It’s okay, Doc E – they can just print more.
Yes, that was sarcasm.

8 years ago

I believe we will soon see a very severe devaluation of the dollar. Our economy cannot continue to function with the amount of debt and paper printing that is taking place. Though the House is recognizing that we must turn the corner and move towards fiscal responsibility the democratically controlled Senate has blinders on and continues on a path of dissolute behavior.

7 years ago

You’re right – this is one of those wtf posts. Correct me if I’m wrong, but didn’t we borrow that money from China?? Aren’t we just paying interest on our debt, not actually repaying the loan? So then, the logical thing to do is loan it to Europe, right? (sarcasm) wtf indeed!!