In 2006, their best year ever, the 10 biggest US banks and brokerage firms made $104 billion in profits. By 2008, they had taken more than six times that amount—$669 billion—in emergency Federal Reserve loans. That amount, as well as amount loaned by the Fed to all its borrowers, remained secret until Bloomberg obtained the information via FOIA requests. The peak borrowing? On Dec. 5, 2008, banks and other companies had an outstanding balance of $1.2 trillion—which, Bloomberg notes, is about how much US homeowners now owe on delinquent and foreclosed mortgages.
Morgan Stanley borrowed the most, $107.3 billion; Citigroup got $99.5 billion; Bank of America took $91.4 billion. “These are all whopping numbers,” says a former Justice Department official. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.” But not just American finance: Nearly half of the top 30 borrowers were European firms; the Royal Bank of Scotland was the biggest of those borrowers, taking $84.5 billion. The $1.2 trillion was more than 25 times the previous Sept. 12, 2001, lending peak of $46 billion. Ultimately, according to the Fed, it suffered no losses and made $13 billion in interest and fees. Click for Bloomberg’s extensive report. (Read more Federal Reserve stories.)