By Neil Irwin
Washington Post Staff Writer
Thursday, June 11, 2009
The Federal Reserve yesterday started disclosing a wider range of information about its lending programs, aiming to stanch growing concerns among lawmakers that it is too secretive.
The Fed released for the first time a new monthly report on lending programs, including its aid to banks, investment firms and companies that use a form of debt known as commercial paper. The document also includes new details about the Fed's support for American International Group and its rescue of Bear Stearns.
Many members of Congress have assailed the Fed for refusing to disclose which companies have benefited from the lending programs and what collateral the Fed is taking in exchange.
The new document addresses the second concern, but not the first. It breaks down, for example, the credit rating and loan types of collateral accepted for the Fed's emergency loans to banks and investment firms. A total of 378 banks, the Fed reported, had pledged $965 billion in collateral to the emergency lending program known as the discount window, in exchange for $448 billion in loans. The largest concentrations of collateral were in business loans (29 percent) and asset-backed securities (18 percent), and 55 percent of the securities pledged as collateral represented either obligations of the U.S. government and housing agencies or were among the most highly rated.
But the Fed still will not identify the individual banks benefiting from the discount window, nor will it name the institutions benefiting from the primary dealer credit facility, commercial paper funding facility or other facilities. A senior Fed official, echoing an argument that Fed Chairman Ben S. Bernanke has made publicly, said yesterday that doing so would make institutions reluctant to participate in the programs, thus undermining the Fed's ability to support the financial system.
Some in Congress said the new disclosure isn't enough. "Today's report is completely insufficient," Sen. Bernard Sanders (I-Vt.) said in a statement. "The American people have a right to know who received more than $2 trillion in loans from the Fed, how much each one received, and what they are doing with this money."
Nonetheless, the Fed said in a statement that the new release is "consistent" with a recently passed Senate resolution that called for the central bank to be more transparent. Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) praised the move as an "important step."
The document also collects information on investment gains and losses on the programs, allowing for a back-of-the-envelope calculation of the central bank's quarterly earnings. For the first three months of the year, the Fed earned $1.2 billion on its discount window and similar lending programs, $2.1 billion on the commercial paper facility, and lost $5.3 billion on its Bear Stearns and AIG portfolios. It also made $4.6 billion on the buying and selling of government debt that it undertakes to manage the money supply.
Put together, the Fed earned $2.6 billion in the first quarter on investment operations. That excludes operating expenses, such as buildings and salaries, and revenue and expenses tied to processing checks and managing the nation's payment systems.