Federal Reserve Criticized for Lending Secrecy

Huffington Post reports:

In the midst of the global financial crisis in 2008, the Federal Reserve lent Goldman Sachs, Credit Suisse and Royal Bank of Scotland at least $30 billion each at interest rates as low as 0.01 percent with no public disclosure of the details, Bloomberg News reported on Thursday.

The latest revelations about the covert infusions of credit provided by the Fed to some of the world's largest banks has amplified accusations that the central bank is a power unto itself, operating according to its own devices and in the interest of major financial institutions -- and beyond accountability to taxpayers.

"It just points out that this was about secrecy to protect banks basically from embarrassment from transparency, which is not supposed to be what the Fed's about," said Dean Baker, co-director of the Center for Economic Policy and Research, in Washington.

"That is the fundamental problem with the Fed," Baker added. "They're supposed to be an agency of the government, not an agency of the banks. But reflexively, there they are protecting the banks, again and again and again."

Some experts say that the Fed acted properly to withhold details of the transactions, asserting the broader financial system might well have been spooked had it been known to what degree the central bank was propping up major lenders.