Thursday, April 7, 2011

Federal Reserve Discount Window Aided Many Banks Which Failed Anyway

So says another in a long line of incriminating stories in The New York Times, highlighting the pervasive involvement of the US government in bailing out failing institutions and implicating it in the spread of moral hazard to the highest levels of American banking:

More than one thousand banks have taken advantage [of the discount window during the financial crisis]. A review of federal data, including records the Fed released last week [by court order], shows that at least 111 of those banks subsequently failed. Eight owed the Fed money on the day they failed, including Washington Mutual, the largest failed bank in American history.

Here's the graphic from the article showcasing some of the worst offenders: