Fed Directors Banks Lavished With Billions From Fed

The Federal Reserve Bank of Atlanta made six major loans to SunTrust Banks at the height of the financial crisis totaling at least $7.5 billion. James M. Wells, the Chairman and CEO of SunTrust, sits on the Board of Directors at the same Atlanta Fed that lent his company the money.

SunTrust also received $4.85 billion in bailout funds from TARP, a separate program run by the Treasury, on November 14th and December 31st of 2008.

According to data released Wednesday by the Federal Reserve, SunTrust's first billion dollars came on November 6, lent through the Fed's Term Auction Facility, a week before it received TARP money, A week after it took the TARP money, it took another billion dollars from the Atlanta Fed. On December 4, it took another $1.5 billion from the Atlanta Fed. The bank received two more billion dollar loans in January from the Atlanta Fed, followed by a May loan of $2.5 billion from the same bank.

The interest rates charged by the Atlanta Fed became more generous over time. The first loan was made with a 0.6 percent rate; the final three were made at 0.2, 0.25 and 0.25 percent. SunTrust, as collateral, put up mostly commercial real estate loans and other commercial loans.

The SunTrust loan is far from anomalous. On October 23, 2008, Fifth Third Bank received a $500 million loan through the Atlanta Fed as part of the Term Auction Facility. Dan Hogan is the CEO of Fifth Third Bank and also sits on the board of the Nashville branch of the Atlanta Fed. Fifth Third Bank also received billions of dollars through the Cleveland and Chicago Fed banks.

Banco Popular, based in Puerto Rico, scored nine loans from the Federal Reserve Bank of New York, through the Term Auction Facility, for between a hundred and 200 million dollars each between January of 2008 and July of 2009. Richard Carrion is the head of Banco Popular and sits on the board of the New York Fed, which was led at the time by Tim Geithner, who is now Treasury Secretary. Popular received $935 million in TARP money.

Sen. Bernie Sanders (I-Vt.), the Senate's lead author of the Fed audit language that led to Wednesday's disclosure, said that one aim of the transparency was to uncover conflicts of interest. Sanders and other advocated of Fed reform insist that bankers should not sit on boards with direct responsibility over the banks they lead.

A SunTrust spokesman didn't immediately return a call, nor did an Atlanta Fed spokesman.

UPDATE: "We'll refer you to the Atlanta Fed to discuss the role of its directors in the process," said Mike McCoy, a spokesman for SunTrust. "That said, I can note that we participated in the program --- and the borrowings were repaid on time and with interest."

UPDATE II: A spokeswoman for the Atlanta Fed said that the bank's credit and risk department evaluated applicants for TAF money, but that the final decisions were made by the New York Fed. "None of these decisions went before our board of directors," said Jean Tate.

Comments

[truthisneeded]

08:40 PM on 12/09/2010

Scandal!

Corrupt Fed and Corrupt Bernanke! Incompetent Congress

[merrylee]

12:59 PM on 12/02/2010

apparently Congresswoman Waters mistake was NOT to be a Fed Governor

[hamsteronwheel]

12:57 PM on 12/02/2010

we are all hamsters on neocon "financial­­­ly engineered­­­" wheels...

madoff was just the tip of the "financial­­­ly engineered­­­" iceberg and acceptable collateral damage and a token sacrifice

geithner and goldman need to be INVESTIGAT­­­ED, PROSECUTED­­­, and CLAWED BACK for financial terrorism along with blankfein, fuld, rubin, summers, bernanke, greenspam, dimon, speyer, stephen friedman, prince, weill, immelt, chais, merkin, picower... They all KNEW the public would forget their crimes due to the sunami of cascading informatio­­­n that no common person can process...

after all they finance the major media outlets.

most are NY Fed alumni.

their unmitigate­­­d GREED destroyed middle class mortgages, 401Ks, health care, schools, and the middle class.

This was the greatest REDISTRIBU­­­TION of wealth in history; UPWARD to the wealthiest few.

by appointing geither, summers, having rubin in a key advisory role, minions of goldman sachs throughout his administra­­­tion, and reconfirmi­­­ng bernanke, Obama is complicit and has facilitate­­­d this pillaging of America.

if he is to be remembered as anything other than a wall street facilitato­­­r, if he is to live up to his campaign rhetoric, he has to make Major, Bold, Progressiv­­­e changes that CLAMP DOWN on wall street, private equity, hedge funds, and invest in the middle class!

[TXfemmom]

12:41 PM on 12/02/2010

Let's face it folks, we are a Third World Country.

[hamsteronwheel]

12:28 PM on 12/02/2010

"Banco Popular, based in Puerto Rico, scored nine loans from the Federal Reserve Bank of New York, through the Term Auction Facility, for between a hundred and 200 million dollars each between January of 2008 and July of 2009. Richard Carrion is the head of Banco Popular and sits on the board of the New York Fed, which was led at the time by Tim Geithner, who is now Treasury Secretary. Popular received $935 million in TARP money.

UPDATE II: A spokeswoman for the Atlanta Fed said that the bank's credit and risk department evaluated applicants for TAF money, but that the final decisions were made by the New York Fed. "None of these decisions went before our board of directors," said Jean Tate."

little timmy, financial terrorist in chief.

[merrylee]

01:02 PM on 12/02/2010

Korean Development Bank (owned by South Korean Govt) took $407M in one day alone

[disgustedwithall]

11:40 AM on 12/02/2010

Amusingly the TV ad for Sun Trust touts itself as the "Bank you can trust" but seems they are the bank the taxpayers really own?

[Dennisrf]

11:19 AM on 12/02/2010

I'm glad to see the spotlight being aimed at the Fed. The more people learn about this mysterious organization the more they will come to see it as a massive criminal enterprise. The Federal Reserve System gives private bankers the enormously lucrative franchise on creating money. They then use this money in a variety of ways to gain sure-fire profits for themselves, with resulting mounting indebtedness for the rest of us, including our government.

[millemtu]

10:52 AM on 12/02/2010

when will someone in banking ever go to jail for this. ridiculous!

[disgustedwithall]

11:42 AM on 12/02/2010

All the corrupted bankers and officials and WS are scheduled to be arrested, booked and charged on the second Tuesday of next week according to unnamed sources

[topguide]

10:09 PM on 12/01/2010

"The Federal Reserve Bank of Atlanta made six major loans to SunTrust Banks at the height of the financial crisis totaling at least $7.5 billion. James M. Wells, the Chairman and CEO of SunTrust, sits on the Board of Directors at the same Atlanta Fed that lent his company the money."

Hold on a second. Isn't this the identical conflict of interest maxine waters is being grilled on by the GOP in congress?

[disgustedwithall]

11:43 AM on 12/02/2010

What is even more fun is the noxious stuff being said by the GA elected in DC about "control the spending, debt etc.. and where, from who, they get campaign bribes.

[CroatianCritter]

07:34 PM on 12/01/2010

Wow! My credit is nearly perfect. Why can't I get these rates? All this disclosure did was prove what I have always known. We have large banks lending each other loans at tremendously generous rates and manipulating our economy so the citizens get left with the results of their bad management (See dollar crash, high unemployment, etc.) I like how they pay the loans back too with their bad assets. What an unbelievable ponzi scheme! The Fed is a private agency that uses public dollars to funnel money to their politically connected friends. And just like every other government agency, the people who work at banks move back and forth between private and public jobs to benefit their respective corporations. Now that this information is public, it is time to "End the Fed' once and for all. Thank you Bernie Sanders and Ron Paul for allowing this disclosure. You are true Americans!

[disgustedwithall]

11:48 AM on 12/02/2010

Wow! My credit is nearly perfect. Why can't I get these rates?

Well place confidential call to your elected or local party (D or R matters little) and explain to them how much you can "contribute" to them, if they say "cannot hear you yet, simply keep raising amount.
NOTE Be sure to get yourself listed as LLC or Corp as that is whole new world for bribes, enough fund might get you both bail out and low rates where you can borrow gov money and then buy their bonds and make huge amounts of interest money from their loan money, and note have the hassle of creating any new jobs and perhaps a tax credit or two along the way...

[Algo]

06:38 PM on 12/01/2010

"The SunTrust loan is far from anomalous" = makes it OK. Stop picking on the incestuous wealthy and their power structures! Their job is to pick on us, or, make that, pick our pockets . . . .

[disgustedwithall]

11:49 AM on 12/02/2010

FOr sure as that sort of offense stuff by the commoners happens every time we buy them books and teach um to read, rowdy serfs are a pain in butt to the learned leaders of this once free nation.

[joebhed]

05:34 PM on 12/01/2010

Thanks to Ryan for pointing out a faintconflict, obviously not illegal and only joining the rest of the immoerality play known as the private banking cartel of the Fed.
Unfortunately Bernie and others think that this type of "transparency" is necessary and capable of removing some of this immorality.
They are wrong.
They forget the nation's monetary system really belongs to the people.
And that it is the renting of the national money system to the private bankers under the Fed system that allows them to create ALL of the nation's money as a debt -totally unnecessarily- and then holds the country and our economy hostage while they rip off the assets they secured in creating those debts.
Have a read of Matt Stoller's piece on the Fed at Naked Capitalism:
http://www.nakedcapitalism.com/2010/12/matt-stoller-end-this-fed.html

Bernie Sanders' reforms are going to do nothing to fix the problem.
Wake up, Bernie and Ryan.
It's our money system.
And we want it back.

[disgustedwithall]

11:51 AM on 12/02/2010

U posted
They forget the nation's monetary system really belongs to the people.

REALITY in CAPS
COMMONERS forget the nation's monetary system really belongs to VERY FEW people.

OK?

[leoluminary]

05:21 PM on 12/01/2010

My gut sez: " That ain't right...no way.....no how!

[disgustedwithall]

11:52 AM on 12/02/2010

Now you see why HC that might cure gut issues has ties to money issues, upper end prefers it that way.