More information is being released concerning the Federal Reserve’s secret lending program, called ST OMO (single-tranche open market operations) to banks in March of 2008.
The latest information concerns Lehman Brothers, the investment giant that was the largest financial institution to go under in the financial crisis of 2008. According to sources, Lehman Brothers borrowed $18 billion from the secret program. This loan, coupled with the previous loans made by the Federal Reserve, meant that Lehman Brothers held $45 billion in total Fed loans when the company collapsed in the fall of 2008. When Lehman went bankrupt, the Fed took as collateral investments that the firm held that were unfit for investment, such as sub-prime mortgages and other risky assets. That’s right — the body in charge of overseeing our nation’s currency was dealing in the very loans and investment practices that sent our economy over the cliff, and we are now just finding out about it.
Since the investments that the Fed took from Lehman were risky, they made British Bank Barclay’s, another participant in this secret lending program, take Lehman’s finances off their hands, which meant another bank was responsible for Lehman’s risky assets. So not only was one bank crippled by bad investment practices, there were now three banks affected by the collapse. Fortunately, Barclay’s was able to survive the storm, just barely, but the Fed became an active player in the worldwide meltdown, and it was with not their own money, but the American taxpayers’ money, and they weren’t obliged to report these transactions to either the US government or to the people.Published in