(Image source: Business Insider/TheDailyGold)

BY JIM FLINK
ANCHOR LAUREN GORES

You're watching multisource business news analysis from Newsy.

One-point-two -- trillion dollars. That’s how much the Federal Reserve secretly loaned to banks and corporations during the financial crisis. More than 20 times -- its previous high. 

Staggering numbers, analysts say, which bring into perspective just how out of control banks, corporations and financial institutions were -- during the worldwide economic meltdown. 

Half of the biggest borrowers were foreign banks.  Royal Bank of Scotland. UBS. Dexia.

Bloomberg -- sued the Fed -- to get an inside look.  Here’s its take.

“Hypo-real estate borrowed 29 billion dollars from the Fed.  It only had 1336 employees.  So that was equivalent to 21 million dollars per employee.  That’s a loan from the Fed to a foreign bank, it’s not even an American bank.  So the Fed clearly was backstopping the global financial system.  Maybe that’s one of the things they didn’t want us to know.”
 

New York Magazine notes, it wasn’t just troubled institutions which got money.

Suggesting -- the Fed seemingly took anyone -- who had their hand out, accepting even junk bonds as collateral.

“If they didn’t need the money to survive, banks could still use the program to maximize profits by borrowing ‘from the cheapest source, because this was supposed to be secret and never revealed…’”

The blog -- Man Are We Screwed notes -- there’s a reason the Fed didn’t want to set off a panic by releasing this information.  Because it would have -- set off a panic.

“Obviously banks suffer from a liquidity problem. They lack funds to invest. And to pay investors. And those of us who might need loans? Are we screwed? Yes, yes, we are.”

The Astute Blogger wants to know -- what happened to all that money which the loans theoretically replaced? Notice the caps lock -- yes -- that is screaming.

“BOTTOM-LINE: EVERYONE LOST.  That - in a nutshell is what happened the last decade - GLOBALLY. The money was lost. ALL THAT MONEY MIGHT AS WELL HAVE BEEN BURNED.“

Not everyone is bashing these loans.  Some analysts note, they may have averted a world-wide meltdown. Power Line blog notes, despite their questionable nature, most of the loans are being paid back on-time.

“So far, the Fed has done fine on these loans. Officials say there have been ‘no credit losses.’ So maybe it all worked out for the best.”

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