The Federal Reserve has launched an unusual public rebuttal of media claims that the central bank massively subsidized big Wall Street banks during the financial crisis.
Bloomberg News reported last week that emergency lending programs by the Fed gave major banks about $13 billion in extra profit by handing them money at below-market rates. The Washington Post, which has a content partnership with Bloomberg, published a shortened version of the article.
A five-page document that the Fed published Wednesday with a cover letter by Chairman Ben S. Bernanke, while not naming Bloomberg specifically, attacks the article’s conclusions.
Recent articles “have made repeated claims that the Federal Reserve conducted ‘secret’ lending that was not disclosed either to the public or the Congress,” the Fed document says. “No lending program was ever kept secret from Congress or the public.”
The Fed disclosed the existence of its lending programs in 2008 and 2009, and the total volume of loans outstanding under each, but it did not name the specific recipients and terms of that lending until required to by legislation and a successful lawsuit by Bloomberg and Fox Business Network.
The Fed also says the report that it lent or guaranteed $7.77 trillion during the financial crisis is misleading, noting that its total emergency lending outstanding never exceeded $1.5 trillion. Bloomberg arrived at the $7.77 trillion figure by counting Fed loan guarantees even when no money changed hands.
“We stand by our reporting,” said Ty Trippet, a Bloomberg spokesman. Late Tuesday, Bloomberg published a detailed response to Bernanke’s response.