Lawmakers criticize Fed’s crisis lending program
Federal Reserve was urged to limit its crisis lending programs for big banks from a bipartisan group of lawmakers.
During the crisis, the Fed invoked its emergency lending powers to pump cash into Citigroup, Morgan Stanley and other banks to prevent the global panic from worsening.
“If the board’s emergency lending authority is left unchecked, it can once again be used to provide massive bailouts to large financial institutions without any congressional action,” they said in a letter to Fed Chair Janet Yellen.
In all, the Fed provided more than $13 trillion to banks that relied on emergency lending programs for an average of 22 months, the letter said.
Specifically, the group criticized rules the Fed proposed in December 2013 to implement the Dodd-Frank requirement that emergency programs provide liquidity to the entire financial system, not failing banks.
The lawmakers said the Fed failed to set a time limit for banks to receive crisis cash.
The Fed is still finalizing its rules for crisis lending.
Source: Reuters
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