Judicial Watch Sues Federal Reserve for Records Detailing U.S. Taxpayer Bailout of European Banks

Judicial Watch

Fed “Currency Swaps” with European Central Bank Ballooned from $400 million to $95 billion in December 2011

(Washington, DC) – Judicial Watch, the public interest group that investigates and fights government corruption, announced today that it has sued the Board of Governors for the Federal Reserve System and the Federal Open Market Committee (FOMC), a committee within the Federal Reserve, for records detailing the Fed’s December 2011 taxpayer-funded bailouts of European Banks.  On December 14, 2011, Federal Reserve Chairman Ben Bernanke reportedly told Republican Senators that he did not have the intention or authority to use taxpayer dollars to bail out troubled European banks, but a “currency swap” program extended by the Fed on November 30, 2011, led to nearly $95 billion in loans to the European Central Bank in December 2011 alone. (Judicial Watch v. Board of Governors of the Federal Reserve System and Federal Open Market Committee (No. 1:12-cv-01114))

Under what is known as a “temporary U.S. dollar liquidity swap arrangement,” the Fed lends U.S. dollars to foreign central banks which then auction these dollars off to their local banks. The Fed’s stated intent for initiating the program was to ease lending for European Banks during the financial crisis. The Fed initiated the program in December 2007 and allowed it to expire in February 2010. In May 2010, the Fed rebooted the program and on November 30, 2011, extended it through February 1, 2013. This extension prompted a sharp increase from $400 million to $95 billion in loans in December 2011.

On January 3, 2012, Judicial Watch submitted Freedom of Information Act (FOIA) requests seeking communications between the Federal Reserve Board of Governors, the FOMC, the Federal Reserve Bank of New York and the European Central Bank related to the November 30, 2011, currency swap extension. Judicial Watch also seeks access to records describing the justification for extending the currency swap program, as well as individual details regarding each swap transaction…

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