New documents released show there was a bank run nearly four years ago, and no one knew about it.
Bloomberg reports that documents released by the US Federal Reserve, only reluctantly and only after court action, reveal that foreign banks were lining up years ago when markets were imploding. The foreign banks took the most out of the US system. They borrowed as much as $33.5 billion and the Fed extended public loans that protected everyone from a lender to local governments in Belgium to a Japanese fishing-cooperative financier to a company part-owned by the Central Bank of Libya.
The interesting part here is that these banks had virtually no presence in the US and represented no threat to the US payment system. And no one knew that the bank run was going on.
As Gretchen Morgenson in the New York Times says, the Fed playing the role of global banker had exceeded its mandate. The public would not want that. But then, they were kept in the dark.
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