In the worst years of the financial crisis, 2007 to 2010, emergency lending from the Federal Reserve to banks and other financial institutions, and to various corporations, totaled more than $16 trillion, a 2011 congressional audit found.
Critics called the lending a blank check for bad groups who pushed the economy into a ditch with their recklessness.
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Why so much to so many entities, both foreign and domestic? The Fed's own position is that it had no alternative but to keep money flowing through the economy as much as possible because, as bad as things were, the result of doing any less would have been far worse.
"We needed to take swift and decisive action to limit the damage to the economy from the spreading distress in financial markets," Donald L. Kohn, then a vice chairman of the Federal Reserve Board of Governors,
said in a May 2010 speech.
That required what the
Fed blandly referred to as "lending programs," and their purpose was "to address the strains in financial markets, support the flow of credit to American families and firms, and foster economic recovery."
Critics charged much of the Fed lending was done in secret.
But the Federal Reserve's own account of the emergency loans is that they were established and conducted transparently, and collateralized to protect taxpayers — and that ultimately they brought in more money than they sent out.
"As verified by our independent auditors, the Federal Reserve did not incur any losses in connection with its lending programs," the Federal Reserve website says. "In fact, the Federal Reserve has generated very substantial net income since 2007 that has been remitted to the U.S. Treasury.
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