Fed Chairman Ben BernankePAUL J. RICHARDS/AFP / Getty Images
The U.S. Federal Reserve Board is no longer a closed vault.
For the first time in nearly a century, the Fed unveiled details of its main lending program for banks, disclosing thousands of transactions made at the height of the financial crisis.
The voluminous records - more than 25,000 pages of documents in all - underline the breadth of the troubles in the banking system as institutions ranging from titans of Wall Street to tiny community thrifts tapped the Fed for help.
The materials show which banks used the Fed's "discount window" over the period from August, 2007, to March, 2010, and how much they borrowed. Dating back to 1914, the discount window is the traditional tool used by the Fed to extend short-term aid to struggling banks.
Thursday's landmark disclosure is part of a broader move toward transparency by the Fed in the wake of the crisis. Some of the change is voluntary, for instance, last week's announcement that Fed chairman Ben Bernanke would hold regular press conferences for the first time.
For the most part, however, the shift toward openness is being driven by the Fed's critics in the U.S. Congress and an assertive news media. In December, a new financial-reform law obliged the Fed to disclose the recipients of the trillions of dollars in loans it made through emergency programs created specifically to tackle the crisis.
The discount window, however, was exempted from that requirement, making it the last corner of secrecy in the Fed's broader crisis-fighting efforts. The release of those records is the culmination of a long legal effort by Bloomberg LP and News Corp., which sued the Fed under U.S. public-information law to reveal loan data.
Revealing the details of the loans made by the Fed is "a natural accountability measure," says Marvin Goodfriend, an economist at Carnegie Mellon University and a former Fed adviser. "There's no reason it seems to me that the information couldn't be released with a suitable lag."
The Fed and major U.S. banks had argued that making such records public would stigmatize the institutions involved, making them look weak in the eyes of competitors and potentially depositors. It could render banks reluctant to seek help in the future, they asserted, making the financial system as a whole more vulnerable.
James Dimon, the chief executive officer of JPMorgan Chase & Co., reiterated that point during an appearance in Washington, D.C., earlier this week. "I think it will make it harder for people to use the discount window in the future," he said.
Mr. Dimon's firm was one of the behemoths that borrowed from the discount window as the crisis deepened, but so too were legions of smaller banks from the Bank of Yazoo City in Mississippi to Cashmere Valley Bank in eastern Washington state.
Banks in particularly dire straits made repeated use of the discount window. Washington Mutual, for example, borrowed $10-billion (U.S.) in the days prior to its collapse. It was acquired by JPMorgan in late September, 2008.
A number of international banks also made use of such loans through their operations in the United States, including Dexia, one of Belgium's largest banks, Royal Bank of Scotland, and Bahrain's Arab Banking Corp.
At least one Canadian bank used the funding. Bank of Montreal, which has operations in the Chicago area, said it used the funds on a limited basis.
"The Fed ensured the discount window and a number of other facilities were available. Like other banks operating in the U.S., BMO prudently tested and maintained its ability to use the these facilities," BMO spokesman Paul Deegan said. "BMO had no issues raising funding in the markets during the financial crisis and maintained a sound liquidity and funding position."
Canadian Imperial Bank of Commerce and Toronto-Dominion Bank said they did not use the discount window.
Canada's major banks also tapped into other emergency-lending programs created by the Fed. Data released in December showed that the five largest Canadian banks accessed $110-billion in funding through one Fed program, loans that have since been repaid in full with interest. Such borrowing represented a cheap form of financing, the banks said in December, not a lifeline.
With files from reporter Grant Robertson in Toronto